The Bank of Russia will only fully adopt a central bank digital currency (CBDC) if the digital ruble meets several conditions within pilot tests, governor Elvira Nabiullina said.
Nabiullina spoke of the digital ruble before the State Duma Committee on Financial Markets on Monday, disclosing more details about the CBDC rollout, local news agency Interfax reported.
The Bank of Russia will only adopt the CBDC after the bank makes sure that rubles can be easily converted from cash into the digital ruble and non-cash, and only at a one-to-one ratio, she said.
“It should be a real full-fledged ruble, no discount or anything else,” Nabiullina noted, adding that the central bank expects to test the digital ruble for at least one year before an actual rollout.
Nabiullina emphasized that the digital ruble should not affect local inflation. “Our assumption is that the introduction of the digital ruble will not accelerate inflation in any way, and will not affect inflation,” she noted.
Russia has experienced a massive spike of inflation amid the COVID-19 pandemic. According to official data by the Rosstat national statistics service, the domestic inflation rate has reached its highest level in almost six years, surging 8.1% in October. The Bank of Russia reportedly expects to lower the inflation rate to 5% or 6% no earlier than 2023.
The governor’s remarks come aafter Russian lawmakers released a set of documents outlining the main aspects of the country’s monetary policy for 2022 and the period of 2023–2024.
One of the documents reads that the Bank of Russia is planning to adopt the digital ruble “gradually, progressively expanding the scope of usage.” The bank doesn’t exclude “restrictions and limits” during the initial stage of the CBDC rollout.
The central bank is concerned that the digital ruble could trigger a surge in the cost of funding for banks, while “reducing the efficiency of the transmission mechanism of monetary policy,” but stated that this can be potentially solved as the digital ruble becomes more accessible and is used by a wide number of customers. The bank also noted potential privacy issues regarding CBDC transactions.
Lawmakers have already recommended a detailed evaluation of such risks to maintain the sustainability of the banking industry and macroeconomic stability.
As previously reported, the Russian central bank plans to launch the first pilot tests for a digital ruble in early 2022 in collaboration with major local banks including Sberbank and VTB, as well as private banks like Tinkoff Bank.
Ray Schuetz received a Masters Degree in computer science from The University of Texas (Austin). Ray has been working as a full-time blockchain consultant for the past 3 years. In his spare time, Ray enjoys writing for EthereumCryptocurrency.com and other crypto news publications.