Moody’s forecasts outflow of bank capital due to the digital ruble

The appearance of the digital ruble could hit the retail bank accounts of Russia’s financial institutions. This is reported by TASS citing Moody’s, the international rating agency.

Analysts expect banks to raise deposit rates to retain customers:

“The redistribution of funds between bank deposits and digital rubles will trigger a partial outflow of customers’ funds from commercial banks.”

As a result, the digital ruble will raise the cost of funding, which Moody’s says will weigh on the creditworthiness of financial institutions.

Analysts forecast higher fees from conducting operations through the Bank of Russia’s accounts rather than through commercial banks. How the Faster Payments System will operate under this arrangement remains unclear.

The indirect model of the digital ruble, in which the central bank would give banks a role as intermediaries, seems to experts to be the most optimal:

“Retail users will find it easier to switch to the new currency if they can interact with a commercial bank rather than directly with the regulator.”

Earlier in October, the Bank of Russia presented a report on the digital ruble. The new coin would be credited to citizens’ electronic wallets, and could be used via mobile devices and other carriers both online and offline.

The head of the Bank of Russia stated that the regulator is discussing the project with banks, as it could potentially affect their business models.

Testing of the digital ruble could begin as early as the end of next year.

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