Digital Ruble: is it an entry into «digital slavery» or a progressive leap?

Yekaterina Maximova

Even before the adoption of the law, the central bank repeatedly «highlighted» the features of the new form of the national currency. Novye Izvestia recalls the main theses of the Central Bank:

— The digital ruble is not a cryptocurrency. This is the third form of the national currency (there is cash, non-cash money, now also the digital ruble);

-Only the Central Bank can issue new money (on the platform of the Bank of Russia);

-Such money can be stored only in digital wallets of citizens and companies opened on the Central Bank platform. And this wallet will not be linked to any particular bank;

— Citizens are still free to choose whether to use the new currency or not.

The pilot launch of the digital ruble will begin in August and will last until the end of 2023.

The new ruble: what is it

«The main point is that it is a control tool. And we must say directly that no one will transfer pensioners and state employees directly — doctors, teachers — in the first rows to the digital ruble. This transition will take place gradually. At least because no one will be able to explain how to work with it directly. First of all, officials will be transplanted to this story. For what purposes? It's obvious. This is, as I said above, a control tool: how funds are spent, where they come from, what kind of money people live on, » financial expert, author of the telegram channel «Economism» Alexey Krichevsky previously explained to Novye Izvestia.

Oleg Ushakov, founder of the SAGRADA LEGAL law firm, an expert in the field of digital rights and financial transactions, ex-adviser to the Bank of Russia and author of the telegram channel «Right to Money», also stressed that the digital ruble is, first of all, a control tool, including spending budget funds.

He believes that the introduction of the digital ruble is associated with minimizing the number of intermediaries, with cheaper and faster payments, as well as potentially with the ability to control the targeted spending of funds, including on project financing transactions. He also noted that the new currency is needed, in particular, for the turnover of new digital assets, so that instant settlements can be made on transactions with them.

And the economist, the author of the telegram channel «Money and the Arctic Fox» Dmitry Prokofiev, even before the adoption of the law on the digital ruble, wondered: what happened that the Central Bank is urgently pushing the story with the digital ruble with all its might?

«Once again, anyone who wants to use the digital ruble will be recorded in the unified register of the Central Bank, and all your bank cards will be connected to the register at the same time — it is no coincidence that one of the advantages of the digital ruble system is the ability to access it from any bank account. Such a register of digital wallets will be a very powerful means of controlling people's behavior — „a step to the left, a step to the right is considered a violation, the regulator blocks your accounts without warning, “ Prokofiev answers his question.

And he adds: «In general, you can see abysses there. And this is much cooler than any „social credit“ that was invented in China. For example, I wanted to „close the city“ — I blocked digital wallets or allowed them to spend money from them in strictly defined places or at strictly defined times — there's a lot to come up with».

There is no clear answer to Prokofiev's question why Russia needed the third form of the national currency.

In the explanatory note to the bill, the need for innovation was explained as follows: «The purpose of the bill is to develop the payment infrastructure in terms of expanding the use of digital technologies by citizens, businesses and the state, increasing the availability, speed, convenience and security of payments while reducing costs by legislating approaches to the transfer of digital rubles».

How to use a digital ruble

After the mass launch of the digital ruble, any citizen will be able to open a digital wallet. There can only be one. According to the Central Bank, it will be possible to launch such a wallet through any mobile application of the bank, but at the same time such a wallet will not be linked to a specific bank. Digital rubles will «go» to the platform of the Bank of Russia.

Non-cash money is changed to digital rubles in one click (1 non-cash ruble = 1 digital ruble). But it is not possible to exchange cash directly for a digital ruble, first you will need to deposit cash to a bank account. And, the Central Bank promises, at any moment the new currency can be transferred back to personal bank accounts in order to then withdraw cash in the usual ways.

To pay for purchases in digital rubles, it will be enough to read the QR code and confirm the payment. Transfers in the third form of currency will be free of charge. Also, the amount of free transfers will be at least three times higher than in the Fast payment System.

The head of the Bank of Russia Elvira Nabiullina has already clarified that the replenishment of the wallet will be limited to no more than 300 thousand rubles per month. There is no limit on spending yet.

Central Bank: total surveillance is a myth

The regulator, well aware of the fears of Russians to give their money under the full control of the state, has collected on its website the main myths about the digital ruble.

Here is how the Central Bank responded to the assumption of total surveillance of citizens: «The amount of information about citizens in transactions with digital rubles will not exceed the amount of information that has already been established for transactions with non-cash rubles. Information about balances on digital wallets and information about digital rubles is protected by bank secrecy in the same way as information on bank accounts».

There is no need to be afraid, the regulator promises today, and that digital money will have an expiration date. And if you don't have time to spend the money, then they will simply burn. These are not points, but rubles, the regulator says. And he promises: they won't burn.

Digital Ruble and banks

Georgy Vashchenko, deputy director of the analytical department of Freedom Finance Global, previously stated that the introduction of the digital ruble would hit the banking system. And the flow into the digital ruble from banks, he believes, can amount to about 3 trillion rubles.

«Since the net interest and commission income of banks is several percent of this amount, the primary losses in the end could amount not to 50, but about 100 billion rubles a year. The profit of banks in previous years was about 2 trillion rubles, of which less than 50% accounted for „Sberbank“. That is, we can talk about the risk of banks losing about 5% of annual profits, » Vashchenko believes.

According to him, the digital ruble will hit harder just those banks that have fewer opportunities to retain customers using non-bank products. «However, the regulator is certainly aware of the risks, and the process will be gradual and controlled, there will be no shock with the outflow of liquidity, » the expert noted.

The regulator itself predicts that banks will have to raise interest rates on bank deposits in order to prevent the outflow of non-cash money into the «digit».

In any case, Oleg Ushakov notes, the digital ruble will not enter the life of Russians immediately.

«Of course, it will take time to get used to the digital ruble. But we all got used to banking products for some time, too, and now in Moscow many often do not have cash with them. Everyone is used to using cards», — Oleg Ushakov believes.