Recently, a good number of countries have begun committing resources to study the potentials of launching a Central Bank Digital Currency (CBDC). For Russia to join the CBDC train is a step towards currency digitization.
Making the CBDC work
To make the digital currency work, the Bank of Russia officially released a consultation paper earlier today, where it disclosed opinions concerning the potentials of a CBDC. According to the document, the central bank believes that an efficient CBDC system can give citizens an alternative payment option, which will complement both cash and existing digital payment frameworks.
The bank also explained that creating a CBDC requires a different payment infrastructure, which the bank has to develop first. Although they are yet to conclude on the timeline for the asset, they plan to launch something that functions like real money. The bank will focus mainly on improving its payment service through the CBDC, which will enhance security and speed while minimizing costs.
An excerpt from the consultation paper:
“The national digital currency will limit the risk of reallocation of funds into other foreign digital currencies, contributing to macroeconomic and financial stability.”
France’s digital currency and Russia’s crypto space
Another exciting feature of the digital Ruble is its availability to everyone. This is contrary to France’s CBDC that will be accessible to only institutional users.
Following the announcement in May, the Bank of France disclosed that it is working towards creating a module for widespread testing of the digital currency. However, France’s CBDC will only be available for wholesale use at the initial stages. This means that only companies like hedge funds and banks will be able to access it. Moreover, the bank is yet to confirm if it would eventually extend its asset to meet retail customers’ needs.
The news of the digital Ruble goes further to confirm Russia’s sudden acceptance of cryptocurrencies. For years, Russia has been on the fence towards crypto adoption, although things began to change a few months back when it passed a pro-crypto bill on digital financial assets into law.
Ever since then, institutions in the country have been taking different measures to structure the country’s crypto space. And while regulators have banned several services from operating in the country, many companies are still accepting cryptocurrency in their numbers.
Finally, with a potential CBDC on its way, it explains that Russia does not want to be left behind by other developed countries.