Digital ruble will undercut bank profits but help businesses: Bank of Russia

Russia’s digital ruble is expected to reduce business costs, but could also cut profits for commercial banks, according to Elvira Nabiullina, the chairwoman of the Bank of Russia.

At a Dec. 3 meeting of “Opora Russia,” a non-governmental organization of small- and medium-sized business, Nabiullina said that a digital ruble could undercut commercial bank profits from commissions and transaction fees. 

Furthermore, she stated that a central bank digital currency is a natural development in making financial services more streamlined:

“This is a natural move in the financial system development: financial intermediaries should become less burdensome for the economy and earn money with new products and services instead of profiting from its monopoly and lack of alternatives […] We believe that small and medium-sized businesses should definitely benefit from this.”

The official also highlighted a number of benefits of a digital ruble including more secure and faster payments. “We are now considering several models in which the digital ruble can exist, in which the interaction of clients, the central bank, and commercial banks are organized in different ways, but these advantages remain in all models. These are fast, reliable and secure payments,” she said.

In October 2020, Nabiullina claimed that a digital ruble will not have the same level of anonymity as cash, noting that the Bank of Russia expects to strengthen user privacy. The chairwoman’s remarks came shortly after Russia’s central bank officially released its CBDC plans on Oct. 13. According to the bank, a digital ruble could soon be used as an additional form of money alongside cash.