Experts weigh the potential of the digital ruble

Testing of the central bank’s national digital currency is in full swing, yet its functionality for the average consumer remains unclear. This and much more were discussed by participants at the sixth meeting of the Digital Principle Club of Digital Lawyers, according to the document summarising the meeting (ForkLog has a copy).

The topic of the digital ruble is no longer theoretical but highly pragmatic, noted Maxim Proksh, chairman of the IPChain Association’s board.

According to Andrey Borisenko, deputy head of the Bank of Russia’s legal department, the goal of the digital ruble is to create a convenient payment system, free for individuals and with low fees for legal entities.

«Sometimes one hears about the third form of money and a wallet. But from the standpoint of the Civil Code of the Russian Federation this, in its legal status, is cashless rubles. That is exactly what is written in the amendments we prepared and accepted into the legislation», — he clarified.

Borisenko also explained that the technology has no notion of a “wallet”; there is only an account. A Bank of Russia employee compared the digital ruble’s functionality to monetary obligations, but not from a commercial organisation, but from the Bank of Russia.

The mere issuance of the asset itself will not lead to inflation, since it is carried out when a user transfers part of their money from their account to CBDC, added Borisenko. Such a function will be implemented in the pilot banks’ apps.

«The introduction of the digital ruble will not harm financial institutions either, because no interest is accrued on digital rubles in deposits, they do not issue loans against them, and you cannot earn bonus points for transactions with them. So people simply have no incentives to hold large sums in this form», the official explained.

Borisenko also recalled the limits on operations with the national digital currency and the possibilities of its marking, which increases the transparency of state operations.

A representative of the Bank of Russia argues that the indisputable advantage of the digital ruble is greater reliability compared with ordinary cashless payments. The Bank of Russia has already undertaken obligations to ensure security, therefore there is no need to insure funds placed on digital ruble accounts.

Technically, the Russian CBDC enables the creation of gateways for cross-border transfers. However, whether citizens will be able to take advantage of this possibility is more a political question, added Borisenko.

«I have serious doubts that the digital ruble will take root in domestic circulation. But the prospect of international settlements could be quite interesting», muses Digital IP researcher and professor of the law faculty at the National Research University Higher School of Economics, Anton Ivanov.

He also noted that courts will spend several more years grappling with the “contradictory phenomenon of digital fiat.” Meanwhile, if the digital ruble is not tied to a credit function, it “will not be wanted by anyone for free,” Ivanov concluded.

Tatiana Rozhdestvenskaya, professor of the Department of Financial Law at Kutafin Moscow State Law University, said that from the perspective of legal doctrine, non-cash money has always been understood as obligations of commercial banks.

Rozhdestvenskaya raised questions about the procedure for resolving disputes between CBDC holders and the Bank of Russia.

«The Bank of Russia does not work directly with individuals or legal entities. And, as far as I know, there are no additional structures or staff provided for this at the moment», she clarified.

Maxim Bashkatov, head of the Legal Development department at the Center for Strategic Developments, said that the duties of the digital ruble platform operator are described in general terms, such as “safekeeping” and “stability.” He also did not fully understand whether commercial banks act as agents, intermediaries, or commissioners of the Central Bank, and how responsibility is divided between them.

«For now, the digital ruble is a mulatto that is not admitted to respectable society of normal banking settlements with a fireplace, but which nonetheless very much wants to prove to its parents that it has a right to exist», the expert concluded.

Earlier, the law on the national digital currency took effect on 1 August. Russian citizens will have the opportunity to widely use the new payment instrument in 2025–2027.

In September, the Russian Ministry of Finance clarified the procedure for accounting for operations with the digital ruble.

Later, financial institutions calculated the costs of implementing the technology. Rosbank estimated its costs over two years at 150 million rubles.