The Ministry of Finance of the Russian Federation commented on the possible issue of the digital ruble, highlighting its main advantages and potential risks.
Last week, the Bank of Russia presented an advisory report on the possibilities and prospects of issuing a digital ruble for public discussion. Organizations and citizens will be able to use the digital ruble to make payments, while it will not be considered a cryptocurrency. Five Russian banks are already ready to take part in testing the digital ruble.
The Ministry of Finance of the Russian Federation also joined the discussion of this initiative. The agency highlighted the main advantages of the digital ruble: reducing the cost of transactions and reducing the burden on banks, expanding opportunities for making international payments, as well as gaining independence from the US dollar and reducing exposure to US sanctions.
On the other hand, the Ministry of Finance also highlighted the possible risks of the digital ruble, which need to be eliminated. These include volatility, the possibility of using the digital ruble for illegal purposes, and the lack of collateral (despite the Bank of Russia’s statement that the stability of the digital ruble will be provided by the state and the central bank itself).
To prevent the destabilization of the economy and social tensions, the digital ruble should be secured, and transactions using this digital currency should be carried out under strict control of regulatory authorities. The agency believes that the introduction of the digital ruble will require a special payment infrastructure and new types of services. To ensure security and transparency, they must meet the requirements of the Financial Action Task Force on Money Laundering (FATF). In addition, the Ministry of Finance and the Bank of Russia are studying international developments on the issue of state digital currency, analyzing its potential and shortcomings, as well as possible approaches to regulation.
Denis Domashchenko, Head of the Laboratory “Research of the Monetary System and Analysis of Financial Markets” of Plekhanov Russian University of Economics, believes that the digital ruble is unlikely to ensure the independence of the Russian economy from the US dollar. As long as the exchange rate of the Russian ruble is not strengthened, the US dollar will always “be in priority”. According to Domashchenko, central banks have begun to explore the possibility of issuing their own digital currency to curb the mining of cryptocurrencies that are already beginning to compete with conventional money.
“Central banks intend to displace all possible competitors, namely private miners, from the niche of digital currencies. Everything related to bitcoin and cryptocurrencies categorically does not suit the central banks of different countries. Therefore, they are trying to take the lead and completely subdue this process, ” said Denis Domashchenko.
Recall that this month, the Bank of Russia proposed to limit the amount of purchases of digital financial assets (CFA) for unqualified investors to 600 thousand rubles per year.