Russia’s central bank digital currency: Prospects and problems

Active digitalization of large domestic financial institutions is a noticeable, definitely positive trend. Russia is one of the five world leaders in the speed of transition to cashless payments, and the number of contactless transfers and payments are increasing every year. Such active development requires changes in legislation, and inevitably, many specialists and representatives of the financial sphere turn to the issue of cryptocurrency and its place in the modern financial world.

In this matter, the Bank of Russia’s policy mainly focuses on destigmatizing the discourse that surrounds cryptocurrencies. The national central bank does not deem it fit to define cryptocurrency as property at the level of civil law but allows considering it as property in relation to certain laws, including the anti-corruption law.

Related: Russia leads multinational stablecoin initiative

Cryptocurrency has a reputation for being a means of criminal money laundering and negatively impacting the stability of financial systems. According to the central bank, there are reasons for strengthening the control over money transactions and increasing their transparency, and more importantly, there is the impetus to develop an alternative such as the digital ruble. It will be a digital currency, the implementation of which has already been successfully carried out in several regions of China by the People’s Bank of China, and several other countries are at the testing stage.

Related: Russia updates its laws for cryptocurrencies

What change will the digital ruble bring?

Firstly, it will increase accessibility and reduce the cost of payment services. This is a concern for many banks since it may lead to an outflow of clients. The scare is that convenient, cheaper electronic wallets from the central bank might become more favorable to the applications they currently use.

Cryptocurrency, unlike the digital ruble, does not meet the interests of money regulators and the tax system and does not…

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