MOSCOW — The Russian ruble has entered the virtual form phase after President Vladimir Putin ratified a special resolution in this regard, in a new race to confront the confusion caused by the unprecedented Western sanctions against Moscow, and to comprehensively restore control over the electronic payments system, after separating Russia from the global financial artery by depriving it of the SWIFT system and freezing its accounts in foreign banks.
The decision to adopt the digital ruble comes in a new effort to form a national payments system that frees it from the dependence of the link to the payment systems controlled by the Western system, which began to use a punitive weapon against Moscow because of the annexation of Crimea and then the war in Ukraine.
The digital ruble is expected to allow financial transactions to be conducted through a new type of currency on a special platform, the operator of which will be the Central Bank, which in turn confirmed that it will ensure the confidentiality of accounts, balances on them and users’ operations, and ensure the use of electronic monetary units to pay for goods and services, make financial transfers and other purposes.
On this basis, the digital ruble will become the third form of Russian currency along with cash and cashless money stored in bank accounts, presumably in the form of a digital token in the electronic wallet.
Moscow hopes that the adoption of the digital ruble will facilitate the implementation of international payments, as well as make transactions within Russia more convenient.
Disadvantages and privileges
However, the views of some Russian economists have not been without reference to some of the shortcomings that will accompany the introduction of the new payment system.
Economist Victor Lachon says that the introduction of the digital ruble will not increase the total amount of money in circulation, but rather the opposite; commercial banks will lose some of their money when their customers start transferring money digitally and sending it to their wallets on the central bank platform, which means that banks’ income from commissions and operations will decrease.
Speaking to Al Jazeera Net, Lashon explains that the clear difference between the digital and cash ruble is its default form, as the user will not be able to put such ruble in the pocket or wallet. Since cashless will be more difficult to use, we won’t see many people switch to the new digital currency.
But he points out, on the other hand, that thanks to the introduction of the digital ruble, the state will receive a number of undeniable advantages, such as: direct control over the spending of budget funds, reduction in the costs of managing budget payments, the possibility of facilitating cross-border payments, and the introduction of the digital ruble in the Russian market will help ensure transparency of financial transactions.
Finance expert Ivana Golovanova predicts that in the initial stage, the digital ruble will be used mainly in the public sector of the Russian economy, which in turn will need between 3 and 6 years to adopt it on a larger scale, depending on the pace at which the necessary technological base is available.
She adds that as one of the possible technologies, facial scanners may be used, under which the digital ruble will be debited from citizens’ accounts using biometrics, which over time will lead to the price of the new form of currency being stable and equal to other forms of the ruble.
But economic analyst Mikhail Belyaev stresses that the digital ruble is not new money, but one of the types of cashless payments, describing it as an algorithm that is more in line with modern banking technologies, and the reason for its introduction is due to scientific and technological progress, and the availability of so-called smooth operations in various fields in which money is used.
On the possible changes with the introduction of the digital ruble, the expert pointed out that it will cost the same price as the current ruble, and will have the exact same purchasing power, meaning that the economic content will not change, in addition to that the use of the digital ruble does not mean any exchange rate ratio in relation to the ruble that already exists, and there will be no obstacles to converting it into money.
The new algorithms are becoming more adapted to modern information technologies, so payments will become faster and more convenient, including in remote areas of the country, where everyone will be able to benefit from them, while maintaining the optional and voluntary nature of the new digital wallet.
According to him, the advantages of the digital ruble lie primarily in significantly speeding up the process of electronic payments and reducing transaction costs.
Most importantly, he believes that it is interesting as a means of international settlements under sanctions, and banning them is not as easy as with Visa and MasterCards.