Expert warns that the digital ruble could dampen the credit market

The launch of the digital ruble could significantly alter Russia’s payments space, and not only in a positive sense. This was stated by Dmitry Grishin, the director of innovations at Uralsib Bank, in his column in Forbes.

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Among the benefits of the domestic CBDC he named new scenarios for using cashless payment instruments and the emergence of “colored” money.

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“This potentially opens a path for a generation of fintech startups that will implement new client services on its infrastructure,” explained Grishin.

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At the same time, with the introduction of the new asset, the expert forecasts a reduction in banks’ profits. Earlier, Sberbank estimated the possible outflow of bank funds at about 2–4 trillion rubles.

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“According to the Central Bank’s assessment, the shift to the digital ruble will lead to a 25% drop in pre-tax profits and a 13% drop in net interest income from the banking sector. This is because the digital ruble would reside not on banks’ balance sheets, but in the Central Bank,” Grishin says.

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The asset could also have a negative effect on the lending market.

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“There is a risk that the instrument designed to cheapen banking operations could lead to higher loan rates due to the contraction of cheap liquidity, such as balances on current accounts,” admitted Grishin.

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According to him, against the backdrop of record lending in 2021, this could cool the lending market and slow the growth of the economy driven by credit impulse.

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Earlier, the prototype of the digital ruble platform was introduced in December 2021. Among the first testers of the asset were 12 banks.

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In January 2022, Promsvyazbank began pilot testing of C2C payments with the digital ruble.

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The domestic CBDC, as a third form of money, is planned to be launched by 2030.

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According to the forecast of the Center for Macro-Economic Analysis and Short-Term Forecasting, by the end of 2024 as much as 9 trillion rubles could flow into the new asset from banks.

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