The digital ruble, Russia’s upcoming central bank digital currency (CBDC), has come under scrutiny from a Russian analyst who claims that it will not provide any benefits to ordinary citizens. Anastasia Tselykh, a special correspondent at RTVI, expressed her concerns about the CBDC in a recent column for the media outlet.
The pilot program for the digital ruble was launched by the Central Bank of Russia this week, with retailers in 11 cities, the Moscow Metro network, and over a dozen banks joining the initiative. However, Tselykh did not hold back in her criticism of the token, describing it as “the first step toward a digital gulag.”
One of Tselykh’s main concerns is that the CBDC will give the Central Bank the ability to track citizens’ money without the need for separate requests to financial organizations. She believes that this benefits the Central Bank but offers no significant advantage to ordinary citizens.
Tselykh also raised concerns about the possibility of individuals being forced to use the digital ruble, despite statements from Central Bank Governor Elvira Nabiullina that usage will not be mandatory. She highlighted the example of China, which began piloting its digital yuan in 2015 and eventually saw large companies paying employees’ salaries using the CBDC. Tselykh suggested that a similar trend could emerge in Russia, with state employees and employees at large companies receiving their salaries in digital rubles.
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While Tselykh acknowledged that the digital ruble may have some advantages, such as the possibility of offline payments, she noted that the necessary technical capabilities for this feature do not currently exist. The Central Bank plans to create prepaid hard wallet-type cards or devices that can be topped up with CBDC funds in advance, enabling electronic payments in areas with no network coverage or internet connection. This is particularly relevant in remote regions of Russia where network coverage and internet access are limited.
In China, a country facing similar challenges in rural areas, wearable wallets and smartcards have been introduced to show users their remaining account balance. China has also rolled out SIM card-based offline hard wallets, currently available only on Android smartphones but potentially becoming compatible with 2G mobiles in the future.
Another aspect of the digital ruble that Tselykh called into question is its potential use in evading sanctions. The Central Bank has claimed that the CBDC has the potential for cross-border payments and could be used to bypass economic restrictions. However, Tselykh remained skeptical, explaining that foreign credit organizations would still be involved in making transactions, even with the use of CBDCs. International regulators would still have the ability to trace these digital fiat transactions, meaning that sanctions risks would persist.
In conclusion, Tselykh expressed her belief that the digital ruble and CBDCs are simply trends and new technologies that are being adopted without a full understanding of their long-term implications. The Central Bank has already faced pushback with two major domestic banks, Sberbank and Tinkoff Bank, withdrawing from the pilot. Business leaders and banks have also expressed doubts about the coin, and surveys have shown that many Russian citizens are not interested in using the digital ruble.
As the pilot program continues and more information becomes available, it remains to be seen how the digital ruble will be received by the public and whether it will indeed offer any significant benefits to ordinary citizens.
