Key Takeaways:
- Bank of Russia says digital ruble should not boost inflation.
- At a State Duma’s important Financial Market Committee meeting, Elvira Nabiullina spoke that the Russian Federation’s Central Bank (CBR) might test a digital ruble for more than a year before launching the CBDC.
- The head of the regulator stated that the digital ruble project would be implemented only if specific criteria were met.
- The monetary authority requires that the digital currency be freely convertible into the other two forms of Russian fiat, cash and bank money, at a 1:1 ratio.
According to the head of the monetary authority, the Bank of Russia is planning an extended trial of the digital version of the national fiat to ensure that it is a full-fledged ruble. However, the regulator has imposed some conditions on the new currency project implementation.
At a meeting of the State Duma’s influential Financial Market Committee, Elvira Nabiullina, the bank’s chair, spoke that the Russian Federation’s Central Bank (CBR) may test a digital ruble for more than a year before launching the CBDC. The head of the regulator stated that the digital ruble project would only be implemented if certain criteria were met.
The first requirement of the monetary authority is that the digital currency is freely convertible into the other two forms of Russian fiat, cash, and bank money, at a 1:1 ratio. In response to the risks of introducing the coin, Nabiullina emphasized that the issue involves monetary circulation and that financial authorities must exercise extreme caution. She even said that “It should be a real, full-fledged ruble. There will be no discounts or anything like that”.
The central bank’s top executive also stated that the digital ruble prototype would most likely be launched at the start of next year. It will launch with trials lasting at least another 12 months to see how the CBDC works. Another essential condition for the digital ruble’s success is that it does not accelerate inflation.
The Bank of Russia wants citizens to choose to use the digital ruble genuinely. They want them to use digital ruble just as they are increasingly selecting non-cash payment solutions. The goal, according to Nabiullina, is not to create a large number of digital rubles but rather to use this new currency to reduce transaction costs. Nabiullina even pointed that “Technologies now allow us to do that. And for us, this will be the criterion of success, not the volume of digital rubles”.
In June, the Russian central bank formed a digital ruble pilot group with over a dozen banks and other institutions participating. The authority intends to finish developing the platform’s prototype in December 2021 and begin testing the CBDC in January 2022 in a series of trials. In addition, to accommodate the digital currency, Russian officials plan to amend 13 laws and codes.
