Russia launches public consultation on ‘digital ruble’

By on 29/10/2020 | Updated on 04/11/2020
Moscow: Russia's central bank has issued a consultation paper on a potential CBDC | Credit: Artur Janas; Pixabay

Russia has launched a public consultation on a central bank digital currency (CBDC) ahead of a possible ‘digital ruble’ pilot before the end of next year.

It is the latest major nation to set out its thinking on a state-backed digital currency. China is seen as the frontrunner among leading economies to launch a CBDC (a ‘digital yuan’), while the European Central Bank (ECB) is running its own consultation on a potential ‘digital euro’.

Russia’s central bank issued a 48-page consultation paper (in Russian; also summarised in English) on a potential CBDC.

There could be a pilot with a “limited number” of users before the end of 2021, bank governor Elvira Nabiullina said, according to a report by Russian news agency TASS. She also said “it is quite real” that a digital ruble could be launched in the near future, TASS reported.

Digital ruble would become ‘major event’

The digital ruble would be a “major event for the economy and society”, according the Bank of Russia’s English-language document. Therefore, it adds, it is “essential to discuss the key aspects, benefits, potential risks, milestones and timeframes for the implementation… with financial market participants, experts and the general public.”

The consultation, which will run until the end of December, emphasises that no decision about whether to launch the digital currency has been taken, adding that it is “premature to specify a definitive timeline for its launch”.

But, like many other central banks, the Bank of Russia believes the possibility requires an “extensive and deep study… in terms of both economic and technological implications.”

Financial access and inclusion

In an English-language Q&A on the consultation, the Bank of Russia emphasised the simplicity, safety and financial inclusion benefits of a digital currency.

“Cashless payments share has been growing over the recent years,” it noted. “A digital ruble can become a new and convenient additional means of payments for both buyers and sellers, including in remote, sparsely populated and hard-to-reach territories with limited access to financial infrastructure.”

The Q&A also notes that the digital ruble will make financial services more accessible “which will improve people’s quality of life” as well as mitigating “the risk of reallocation of funds into foreign digital currencies”. This, it adds, will contribute to “macro-economic and financial stability”.

Global Government Fintech recently reported that a group of major central banks had agreed on the “foundational principles” required for any publicly available CBDC. ‘Central bank digital currencies: foundational principles and core features’ was published by the Bank of England, Bank of Canada, Bank of Japan, US Federal Reserve, Sveriges Riksbank (Sweden) and Swiss National Bank, as well as the ECB and the Bank for International Settlements (BIS).

The ECB plans to decide whether to progress a potential digital euro by mid-2021. Benoît Cœuré, head of the BIS Innovation Hub, was recently asked whether there was “first-mover advantage” with CBDCs. He said: “It’s not an international race. But there is an advantage to moving quickly because the private sector is moving quickly.

“The private sector is ahead of us in many aspects of digitalising payments and the COVID-19 crisis has accelerated this change. It’s very important that central banks can be part of the evolution so they can continue to do what citizens expect them to do.”

About Ian Hall

Ian is editor of Global Government Fintech a sister publication to Global Government Forum. Ian also writes for media including City AM and #DisruptionBanking. He is former UK director for the pan-European media network Euractiv (2011-2018), editor of Public Affairs News (2007-2011) and news editor of PR Week (2000-2007). He was shortlisted for ‘Editor of the Year’ at the British Society of Magazine Editors (BSME) Awards in 2010. He began his career in Bulgaria at English-language weekly the Sofia Echo. Ian has an MA in Urban and Regional Change in Europe and a BA in Economics, both from Durham University.

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