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The Bank of Russia wanted to clarify some concerns about the effects of the digital ruble. In practice, the new Russian CBDC will not lead to an increase in the amount of money in the economy and therefore will not exert inflationary pressures.
Summary
Bank of Russia clarifies that the digital ruble will not affect the country’s inflation
The Bank of Russia has released several statements regarding the digital ruble, to clarify general concerns.
Specifically, the draft of the main guidelines of the unified state monetary policy for 2025 and the period 2026 and 2027 of the Bank of Russia states the following:
“After the introduction of the digital ruble, the Bank of Russia will continue to target inflation. The appearance of a digital form of the national currency will not affect the mechanisms of monetary policy implementation. The Bank of Russia will continue to manage money market rates by conducting liquidity provision operations to banks and absorbing the same”.
In practice, the regulatory authority wanted to emphasize that the issuance of the digital ruble will not lead to an increase in the amount of money in the economy. On the contrary, the Russian CBDC will only affect the demand for cash and funds in bank accounts by economic operators.
The digital ruble will therefore not exert any inflationary pressure and will not affect the monetary policy mechanisms of Vladimir Vladimirovič Putin’s country.
Bank of Russia and the digital ruble ready to change only the structure of the money supply
Once it was clarified what the digital ruble will not do, the Bank of Russia then clarified what it will do.
In practice, the introduction of the digital ruble will lead to the creation of an additional payment infrastructure that will help increase the sustainability, reliability, and uninterrupted operation of the payment and monetary settlement system in general.
Not only, the digital ruble will not affect the basic principles of the functioning of the banking system nor the principles of implementation of monetary policy. In this regard, here is what is stated in the text:
“First of all, the two-tier banking system will be preserved, credit institutions will maintain their main functions: lending to the economy and accumulating the savings of the population”,
In any case, the Bank of Russia began testing the virtual Ruble on August 15, 2023. Initially, about 600 people from 12 banks participated. From September 1, 2024, many others have joined. The bank stated that:
“Starting from September 1, 2024, the pilot has been expanded. The total number of participants has increased several times with the start of the new phase.”
The revelation of Sberbank on the Russian CBDC
Last month, the largest Russian bank Sberbank reportedly revealed its participation in the pilot program on the digital ruble.
Not only that, Anatoly Popov, deputy director of Sberbank, also stated that digital ruble operations with customers will begin in 2025.
This means that within a few months, the Russian CBDC could already be in circulation.
In reality, it seems that the expected launch date for the digital ruble in its CBDC version will be by July 2025.