Russian banks may be the biggest losers from the introduction of a digital ruble, while retailers will save on acquisition fees, analysts have predicted. The benefits for consumers using the new digital currency are not as obvious, as they may not be paid any interest or rebates.
The launch of Russia’s digital ruble is said to result in losses for banking institutions
Commercial banks stand to lose up to 50 billion rubles a year (almost $715 million) when a digital version of the ruble is introduced, according to a forecast by financial experts at Yakov and Partners, the former Russian arm of management consultancy McKinsey. .
Meanwhile, retail chains could increase their revenue by up to 80 billion rubles each year, the authors of the research believe, cited by the Russian edition of Forbes. At the same time, consumers may not receive interest on their balances or refunds for their transactions.
Specialists see the digital ruble occupying a niche in the domestic retail payment market, absorbing part of the share of card payments. The banks’ losses will be mainly due to reduced income from the commission they receive for processing such payments. Retailers will benefit from savings on acquisition fees and faster instant payments than card transfers.
Benefits to consumers are not guaranteed as the Russian central bank’s digital currency concept (CBDC), an electronic box, does not provide for the accrual of interest on holdings, unlike bank deposits. They are also likely to lose the refund that banks currently pay for transactions with their cards, the report notes:
The digital ruble does not have obvious advantages in terms of convenience in daily use, and international experience shows that the reduction in the cost of acquisition does not lead to price reductions or a slowdown in price growth, only to an increase in prices. retailer profits.
The digital ruble, issued by the Bank of Russia, is supposed to become the third form of Russian national fiat, after cash and electronic money. It is intended to be used as a means of payment and a store of value, but is not intended to replace bank deposits or payments.
The project was first announced in October 2020, and a prototype was finalized in December of the following year. The pilot phase began in January 2022, with the monetary authority planning to begin testing with real transactions and users in April 2023 and aiming for full rollout in 2024. A digital ruble bill was submitted to the Russian parliament last January.
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