Russian Analyst Challenges the Potential Benefits of Digital Ruble for Everyday Citizens:

The recently launched pilot of Russia’s digital ruble, the nation’s central bank digital currency (CBDC), has been met with skepticism as a Russian analyst questions its advantages for ordinary citizens. In a recent column for RTVI, Anastasia Tselykh, a special correspondent, expressed doubts about the benefits that the digital ruble would bring to the general population.

Skepticism Surrounding Digital Ruble’s Impact:
Tselykh did not hold back in her critique of the digital ruble, likening it to a “first step toward a digital gulag.” She argued that the primary beneficiaries of the CBDC are likely to be the Central Bank itself, which would gain the ability to monitor citizens’ financial transactions without requiring separate requests from financial institutions.

According to Tselykh, “There is no great benefit for ordinary citizens from the digital ruble.” She raised concerns about the potential surveillance implications of the CBDC, suggesting that it could lead to increased monitoring of individuals’ financial activities.

Russian CBDC Pilot and Initial Reactions:
The Central Bank of Russia launched a pilot for the digital ruble, involving retailers in 11 cities, the Moscow Metro network, and over a dozen banks. However, Tselykh’s commentary reflects growing skepticism and pushback regarding the potential benefits of the CBDC for everyday citizens.

Despite Central Bank Governor Elvira Nabiullina’s assurance that the use of the digital ruble will not be mandatory, Tselykh referenced China’s experience with its digital yuan. In China, large companies eventually began paying employees’ salaries using the digital yuan. Tselykh suggested that a similar trend could emerge in Russia, with state employees and workers at major companies potentially receiving their salaries in digital rubles.

Potential Advantages and Challenges:
While Tselykh was critical of the perceived lack of benefits for ordinary citizens, she did acknowledge a potential advantage: the possibility of using the digital ruble for offline payments. However, she noted that the technical capabilities for offline payments do not currently exist.

To address this, the Central Bank has proposed the creation of prepaid hard wallet-type cards or devices that can be topped up with digital ruble funds in advance. These prepaid cards or devices could enable electronic CBDC payments in areas with no network coverage or internet connectivity.

CBDC’s Role in Cross-Border Payments and Sanctions:
Tselykh also addressed the Central Bank’s claims regarding the digital ruble’s potential for cross-border payments and evading sanctions. She expressed skepticism about the effectiveness of cross-border transfers using CBDCs, as foreign credit organizations would still be involved in transactions.

Tselykh pointed out that international regulators would still be able to trace transactions involving digital fiat currencies, suggesting that the risks of sanctions would not diminish significantly.

Uncertain Future of Digital Ruble:
In conclusion, Tselykh expressed uncertainty about the long-term implications of the digital ruble and CBDCs in general. She hinted at the possibility that the adoption of CBDCs might be driven by the trend of embracing new technologies without fully understanding their eventual outcomes.

The Central Bank’s CBDC initiative has already faced pushback, with major domestic banks like Sberbank and Tinkoff Bank opting out of the pilot. Business leaders and banks have also expressed doubts, while surveys indicate that many Russian citizens are not enthusiastic about using the digital ruble.

As the digital ruble pilot continues, its impact on ordinary citizens and the broader financial landscape remains a subject of ongoing scrutiny and debate.