Anatoly Aksakov, the leader of Russia’s State Duma Banking Committee, believes the digital ruble will see the role of banks “fade in the future with the development of blockchain,” according to state news agency RIA. Other news outlets have described him as the author of the central bank digital currency (CBDC) laws. Legislation delayed the launch of the digital ruble pilot, which started last month.
Currently, legislation restricts the role of the digital ruble. So bank deposits cannot be denominated in digital rubles, nor can there be loans. The central bank set spending limits of 200,000 rubles per day ($2,043). And the top up is restricted to 300,000 rubles per month ($3,064).
“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.”
However, the citizens of Russia might not welcome that scenario. Surveys have not shown a keen appetite from consumers, although there is also a lack of awareness. And banks are concerned about the costs involved in their participation as CBDC intermediaries, never mind the vision of transferring their role to the central bank.
Big Brother CBDC
As cash goes digital, the anonymity of physical cash is lost. But if banks also fall by the wayside, then Big Bother control over money looms large. From the start, the Bank of Russia stated that it planned to impose restrictions on digital ruble usage. For example, to prevent prisoners or fraudsters from using it.
Last week, we reported that Aksakov spoke about the ability of the central bank to block payments. “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,” he said at the time.
Yesterday, the central bank elaborated on these points. Restricting the usage of a currency is often referred to as ‘coloring’ it. For example, a food stamp CBDC could only be spent on food.
The central banks of Europe and England have been reluctant to allow this functionality – certainly at the base layer.
“This opportunity will be considered at later stages of promoting the digital ruble,” said Alexey Zabotkin, Deputy Governor of the Bank of Russia, according to InterFax.
“Restrictions on the use of money reduce its liquidity. Large restrictions on what you can spend a particular unit of money on makes that money less valuable compared to money you can spend on anything, so the question of this kind of functionality needs to be addressed very carefully. Theoretically, such an opportunity is really possible.”
