Nabiullina: digital ruble will become a full replacement for cryptocurrencies for Russians

Cryptocurrencies and stablecoins threaten the financial stability of the state, but CBDC can withstand this risk. This was stated by Elvira Nabiullina, head of the Bank of Russia, at the conference of the Institute of Developing Economies of the Bank of Finland.

According to her, the digital ruble will be able to meet all the needs of citizens interested in cryptocurrencies.

“CBDCs provide cheap payment solutions with data protection, and in the long run will speed up cross-border transactions,” Nabiullina said.

The head of the regulator clarified that anti-money-laundering safety requirements do not allow anonymity in the creation of the digital ruble. Therefore, the new asset will be tied to the identity of its owner.

“We will create a system based on accounts. At the same time, the currency in user wallets can be recognised, as it will consist of individual distinguishable units – tokens. This will facilitate the emergence of new functions related to tracking cash flows or programmable use,” Nabiullina said.

For example, the current holder of the digital ruble will be able to spend the asset only on a specific type of goods, and the government could use such an approach for targeted social transfers.

The Bank of Russia leans toward a zero-interest design of the digital ruble, meaning CBDC holders will not receive any remuneration for keeping the asset in their accounts.

“The economic design of a CBDC should emphasise the advantages of using the currency as a medium of exchange, but restrict its use as a store of value,” Nabiullina said.

The regulator is also examining the possibility of enabling offline operation for the digital ruble.

Earlier, the head of Sberbank, Herman Gref, stated that there is a need to refine the project of the national digital currency.

Earlier, the Bank of Russia and the Finance Ministry confirmed plans to launch the digital ruble as a third form of money by 2030.

Testing of the new financial instrument will take place at 12 banks in the first quarter of 2022.

The launch of the digital ruble will require changes to a number of Russian laws and codes. In particular, it is planned to enshrine the central bank’s rights to govern the asset’s circulation and to legalise it as a means of payment.

In the case of a launch of the digital ruble, analysts forecast an outflow from banks of 9 trillion rubles.

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