Analysts predicted that Russian banks would be the main losers from the introduction of the digital ruble while retailers would save on fees. The benefits to consumers using the new digital currency are not clear, as they may not be paid any interest or cashback.
It is believed that the launch of the Russian digital ruble is causing losses to banking institutions
Commercial banks could lose up to 50 billion rubles a year (nearly $715 million) on introducing a digital version of the ruble, according to projections prepared by financial experts at Yakov and Partners, the former Russian division of management consultancy McKinsey.
Meanwhile, retail chains can increase their income by up to 80 billion rubles every year, the authors of the research believe, citing the Russian edition of Forbes magazine. At the same time, consumers may not receive any interest on their balances or cashback for their transactions.
Experts are of the opinion that the digital ruble occupies a privileged position in the domestic retail payment market, taking part of the share of card payments. Banks’ losses are mostly due to diminished revenue from the commission they get for processing these payments. Retailers will benefit from savings on acquisition fees and from instant payments that are faster than card transfers.
Benefits to consumers are not guaranteed because the concept of the Russian Central Bank’s digital currency (CBDC), electronic cash, does not envisage the accumulation of interest on property, unlike bank deposits. They are also likely to lose the cash back that banks currently pay for transactions with their cards, as the report notes and details:
The digital ruble does not have obvious advantages in terms of convenience in daily use, and international experience shows that lower purchase costs do not lead to lower prices or slower price growth, but only increase retailers’ profits.
The digital ruble, issued by the Bank of Russia, is supposed to become the third form of the Russian national currency, after cash and electronic money. It is intended to be used as a means of payment and a store of value but is not intended to replace bank deposits or payments.
The project was first announced in October 2020 and the prototype was completed in December of the following year. The beta phase started in January of 2022, with the monetary authority planning to start trials with real transactions and users in April of 2023 and aiming for a full launch in 2024. A bill on the digital ruble was submitted to the Russian parliament last January.
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