Russia’s digital ruble trials started in July 2023 and it will soon be possible for citizens to request to receive their pension and other social payments in digital rubles. A report on the blogging platform DZen stoked fears that receiving pensions and state salaries in the central bank digital currency (CBDC) will become compulsory. In contrast, the head of the central bank emphasized that the use of the CBDC is voluntary. In related news, the first ATM-based digital ruble withdrawal has launched.
On Dzen, the blogger wrote, “The state will know everything about everyone. But this is not the most important thing. And the most important thing here is that whoever has total control over money also has the opportunity to disconnect any person from the system.”
Regarding disconnecting people, the Bank of Russia was upfront in the early days that it would potentially disconnect people who misbehave, such as fraudsters and tax evaders.
Meanwhile, Dzen quoted economist Alexander Razuvaev as saying, “Gradually, pensions will be replaced with digital rubles. In the near future, this is most likely inevitable. So, little by little, pensioners are being driven into the trap of the Central Bank and are being encouraged to switch to a new type of money.”
Central bank says digital ruble optional
Talking shortly before the launch of the first pilot on July 2023, Bank of Russia Governor Elvira Nabiullina said of the CBDC, “This is an absolutely voluntary use, it is an additional opportunity for people,” highlighting the convenience of a new, third form of money.
The blog post also quotes Nabiullina as saying, “The Central Bank only advocates the voluntary transfer of pensions to a digital ruble. This is our position. Many people now remember transferring pensions to the MIR card, but many forget that a person had a choice – to receive a pension in cash, by mail or to his own account.”
Russian government and programmable money
However, it needs to be clarified whether these decisions are entirely up to the central bank. Legislator comments have helped to fuel concerns.
Recently, the senior Russian legislator in this area, Anatoly Aksakov, discussed the potential programmability of a digital ruble. He noted that parents can restrict how children spend their pocket money. Regarding government restrictions on digital ruble usage, he stated, “Can the state interfere in this process? I admit that this is also possible, although we have not yet developed such a procedure for using digital rubles.”
Consider a hypothetical scenario where the government pays pensions using the digital ruble. The pensioner could then transfer the entire amount to their bank account. That’s barring a government restriction preventing this. Hence, while a Russian CBDC could be more Big Brother than other jurisdictions, currently consumers can use bank accounts, giving them options.
For now.
The same legislator separately gave his vision of the central bank becoming the country’s primary banker.
“My personal opinion is that after some time, we will make a decision that deposits can be placed at the Central Bank and loans can be issued since life requires it. Because it will be faster and, perhaps, more efficient,” said Aksakov.
He added, “Decisions will be made by a robot – a person is not needed there. Perhaps a bank is not needed as an institution, since the digital ruble will be very much automated.”
Launch of first digital ruble ATM top-up
Meanwhile, Forbes Russia reported that VTB Bank has launched the first digital ruble cash withdrawal.
It combines using the VTB app on a smartphone where the user selects a digital ruble account. They then scan a QR code on the ATM, presumably acknowledging the authorization of the withdrawal. After entering the amount, this moves the CBDC out of the money out of the digital ruble account and makes it available for withdrawal via the ATM.
