The Bank of Russia has recently announced that it is considering creating its own central bank digital currency (CBDC), the digital ruble.
In a Public Consultation Report released by the financial authority on Tuesday, it was made clear that the development of the digital currency would not in any way replace the existence of cash but would rather act as an additional form of the country’s fiat money.
The bank stated that the government-backed digital currency will possess the qualities of both cash and non-cash money. It would facilitate remote payments and online settlements. It can also be used for payments offline, just like cash.
The digital ruble will be made available to all economic entities including citizens, businesses, financial market participants, and the government. Users can be able to access the digital ruble from their mobile devices.
Transactions using the CBDC can be conducted both online and offline. Online transactions are similar to using an e-wallet. To enable offline payment, users will have to store some of the digital rubles in their offline wallets.
Each unit of the digital ruble would come with a unique digital code that would identify it, just like banknotes. The digital ruble will also have the three functions of money, as a store of value, as a measure of value, and as a means of payment.
The bank also outlined a number of other functions that the digital ruble would perform, including faster, easier, and safer payment. It will also reduce the cost of payment services and money transfers while increasing competition among financial institutions.
“This will spur innovation in both retail payments and beyond, and support the development of the digital economy. And reducing the dependence of users on individual providers will increase the stability of the country’s financial system,” the central bank said.
However, the bank made it clear that the digital ruble should not be confused with private cryptocurrencies. It stated that the digital ruble “is an obligation of the central bank, implemented through digital technologies, and has nothing to do with ‘cryptocurrencies’. It is a fiat currency, that is, a currency whose stability is ensured by the state represented by the central bank.”
The Bank of Russia has not yet concluded that it would issue the digital ruble. It is only considering the various possible ways of implementing the CBDC when it finally decides to issue it.
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