Russian legislators warned about the potential risks that could arise from the introduction of a virtual ruble. They include the potential increase in competition pressure for banks, and the new information security challenges.
Financial Market Committee sees threats in Digital Ruble Project
Russia’s digital fiat, currently under development, brings certain risks that lawmakers want the central bank to carefully examine. The implementation of the digital ruble may pose a challenge for the country’s financial sector, members of the important Financial Market Committee at the State Duma, the lower house of parliament, have noted after deliberations on the project.
The conclusion comes in response to the “Main Directions of Monetary Policy Until 2024” presented by the Central Bank of Russia (CBR), crypto news outlet Forklog reported this week. The document covers the prospects for the launch of a national digital currency among other aspects of Moscow’s government monetary policy.
Deputies worry that Russia’s new currency will make it more difficult for banks to compete. It could reduce the profitability of banks and increase state involvement in the sector.
Furthermore, the introduction of a digital, programmable fiat carries new kinds of risks — in the field of information security, for example. According to the authors of this report, Bank of Russia was advised to study the risks to the macroeconomic stability as well as the banking sector. The authors recommend that regulators prepare prepared response plans in advance in the event of these threats.
The Duma Committee expects the introduction of digital currency to facilitate fast and simple payments, while also reducing costs. It “positively assesses the analysis of the introduction of digital currency and believes that it would also be interesting to analyze the impact of the spread of cryptocurrencies in global transactions,” the conclusion reads.
With Russians increasingly choosing non-cash payment solutions — these have reached 75% in the past seven years — and with the growing popularity of cryptocurrencies in mind, the CBR and other institutions have seriously taken on the task of offering Russian citizens a government-controlled digital currency. To accommodate the digital currency, officials plan to modify 13 Russian laws.
Bank of Russia established a pilot group for digital rubles in June with participation from more than a dozen banks as well as other stakeholders. The authority plans to complete the platform’s prototype in December 2021 and start testing the CBDC in January 2022. Elvira Nubullina, head of bank, stated in recent statements that Russians would be able to use the digital ruble as a substitute for other electronic currencies, such decentralized cryptocurrencies or stablecoins, backed by foreign fiat.
Is it your opinion that CBDCs, such as the virtual ruble, pose serious risk to the financial system? Please comment below to share your views.
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