Russian consumers may soon be able to pay for goods and services with a new digital currency, and it looks like banking institutions could be its biggest losers – while retailers reap the rewards.
Analysts at Yakov and Partners (the former Russian division of management consultancy McKinsey) predict that the launch of a digital ruble could result in losses of up to 50 billion rubles (almost $715 million) annually for commercial banks. On the other hand, retailers could increase their annual income by up to 80 billion rubles.
So, while it may be good news for retailers and those who don’t trust banks, it’s a sad prophecy for financial institutions. But there is still hope for banks – their losses could be offset if the digital ruble offers attractive services, such as competitive interest rates or cashback for customers.
The Consequences!
The experts are predicting that this new digital currency will occupy a niche in the domestic retail payments market, taking away part of the market share of card payments. Banks should be wary though, as this will likely mean a decline in the commission they charge for processing such payments.
Retailers may well benefit from the digital ruble, as the fees they have to pay for the acquisition of payments will be reduced due to instant payments — faster than the time it takes for card transfers.
On the other hand, the benefits to consumers of the digital ruble might be limited. Unlike deposits, the concept of the Russian central bank digital currency (CBDC) does not include interest for the holders.
In October 2020, the project was initially declared and a prototype was concluded by the end of the following year. In January 2022, the pilot phase began, with the central bank of Russia planning to conduct trials including actual transactions and customers in April 2023, and aiming for complete launch in 2024. This past January, a bill for the digital ruble was proposed to the Russian parliament.
