In October 2020 Russian Central Bank announced the possible issue of a digital ruble that can appear on the Russian market at the end of 2021. There is no yet a comprehensive concept of new currency, but it is known that digital rubble will become third form of cash alongside with cash and non-cash. According to Elvira Nabiullina, the head of Russian Central Bank, people will be able to choose the type of currency. Wherein, all three forms of the Russian ruble will be absolutely equal: as now 1 ruble in cash is equivalent to 1 non-cash ruble, so 1 digital ruble will be equivalent to each of them.
What is digital ruble?
Digital ruble is an additional form of the Russian national currency that will be issued by the Bank of Russia in digital form. The digital ruble combines the properties of cash and non-cash rubles. Like non-cash money, the digital ruble makes remote payments and online settlements possible. On the other hand, like cash, the digital ruble can be used offline - if there is no Internet access.
There are several advantages of the digital ruble
First, it will be possible to pay with digital rubble not only online, but also without access to the Internet and mobile communications. Therefore, the digital ruble will be very useful for organizing government payments insofar as it will be possible to transparently allocate funds for special purposes. Second, it can potentially reduce the costs of settlements and, consequently, increase financial accessibility for Russian citizens. Third, it can create opportunities for the development of new financial services and instruments. Moreover, the Russian Ministry of Finance is confident that the digital ruble will reduce the burden on banks, expand cross-border payments and moreover reduce dependence on the dollar and exposure to sanctions.
Why is the digital ruble not a "cryptocurrency"?
"Cryptocurrency" is fundamentally different from the Central Bank money. "Cryptocurrencies" do not have a single issuer, as well as guarantees for the protection of consumer rights, their value is subject to serious fluctuations. In most countries, they cannot be used to pay for goods and services and, as a rule, they do not have a single institution that would ensure the safety of such funds. While the digital ruble is a Central Bank obligation, realized through digital technology and has nothing to do with "cryptocurrencies". It is a fiat currency, i.e. a currency whose stability is ensured by the Russian Federation represented by the Central Bank.
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