Introduction of the Digital Ruble
According to a report by the National Rating Agency (NRA), the introduction of a digital ruble is projected to contribute approximately $3.2 billion annually to the Russian economy. This assessment, reported by both RBC and TASS, comes from the Moscow-based credit ratings firm, which operates under the authority of the Central Bank of Russia and evaluates various financial institutions as well as government entities.
Implementation Timeline
The launch of the digital currency, officially referred to as the central bank digital currency (CBDC), is expected to commence by next year. Major financial institutions in Russia will initiate their adoption of the CBDC in the fall of 2024, while smaller businesses will be required to start using it by 2027 or 2028. A significant aim of the government is to facilitate welfare transactions like pensions and child support through this digital currency.
Economic Impact and Projections
The NRA acknowledges that the initial phase of the digital ruble’s implementation will involve costs for public and private sectors. However, it anticipates that by 2031, the digital ruble will be on track to generate as much as 260 billion rubles (or $3.2 billion) for the economy annually. Additionally, the banking sector can expect to earn around 50 billion rubles (approximately $619 million) each year.
Concerns and Skepticism
Despite these forecasts, skepticism exists among banking leaders regarding the necessity of a digital ruble. Concerns have been voiced that the currency could lead to a loss of clients as new services might bypass traditional banking systems. NRA analysts predict that in the short term, banking institutions might experience a net profit decline of 8-10%, but this should transition into greater long-term profits after the CBDC is fully operational.
Legislative Support and Future Benefits
Following the recent signing of legislation by President Vladimir Putin in July to create a detailed plan for the digital ruble’s rollout by September 1, 2026, the NRA has suggested that both businesses and the government will start enjoying the benefits from the new currency between 2029 and 2031. For larger businesses, projected earnings from the digital currency in its early adoption years may range from 30 to 50 billion rubles ($371 million to $619 million). Financial institutions may gain around 8 billion rubles ($99 million), according to the agency’s analysis.
Differing Perspectives
German Gref, Chairman of Sberbank, expressed doubts, stating that there seems to be no real benefit for citizens or businesses since economic transactions in Russia are already largely digital. He argued that the CBDC addresses a non-existent issue.
In contrast, the Ministry of Finance sees potential in leveraging the digital currency for government contracts, suggesting that it could enhance transparency and combat corruption. Moscow is also interested in establishing CBDC-based trade with other BRICS countries, especially as members like China advance in their own digital currency implementations. There is a strategic belief that cross-border CBDC collaborations could shield these nations from sanctions imposed by the United States, aligning with Russia’s ongoing efforts to reduce its dependency on the dollar in trade.
