Russian banks may be the key losers from the instigation of a digital ruble while retailers will save on obtaining fees, as per several analysts’ prediction. The advantages for consumers using the new virtual currency are not that evident as they may not be paid any interest or cashback.
Commercial banks may lose up to 50 billion rubles annually (approximately seven hundred and fifteen million dollars) when a digital version of the ruble is introduced, as per a forecast produced by financial experts at Yakov and Partners, the former Russian division of management consultancy McKinsey.
In the meantime, retail chains might probably increase their income by up to eighty billion rubles each year, according to the authors of the research, cited by the Russian edition of Forbes. At the same time, end users receive no interest on their balances or cashback for their transactions.
The advantages for consumers are not guaranteed as the concept of the Russian CBDC, an electronic cash, does not foresee the accrual of interest on the holdings, contrastive to bank deposits. They might also possibly lose the cashback that banks presently pay for operations with their cards, as per the report.
The report further elaborates,
“The digital ruble has no obvious advantages in terms of convenience in everyday use, and international experience shows that the reduction in the cost of acquiring does not lead to price reductions or slowdown in price growth, only to an increase in retailers’ profits.”
Notably, the aforementioned project was first declared in the month of October, 2020. The prototype was completed in the month of December, the following year. The trial phase began in the month of January of 2022, with the monetary authority planning to start trials with real transactions and users in April 2023 and aiming for full launch in 2024. A bill on the digital ruble was submitted to the Russian parliament this past January.
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