Russian wallets replenished with virtual currency
The Bank of Russia announced that it will begin testing operations with the digital ruble in August 2023. The experiment will involve 13 banks that have passed the technical stages of preparation, and retail outlets in different cities of the country. On the one hand, the introduction of digital money is a powerful step towards the digitalization of society and the modernization of the Russian financial system. On the other hand, many citizens simply do not understand how, where and under what conditions to use the digital ruble. Misunderstanding gives rise to fears and rumors about the almost forcible withdrawal of ordinary money from circulation. How does the digital ruble actually function? Where and for what can they pay? Will pensions and salaries be issued in digital money soon? The answers to these questions were sought during an online conference at MK by Sofya Glavina, Ph.D. in Economics, head of the Digital Economy program at IMEB RUDN University, Gleb Antipov, executive director of DC Engineering, and Roman Nekrasov, an expert in DFA and decentralized services.
: — The digital ruble is the next form of evolution of the non-cash form of payment. A virtual currency is something that is closed exclusively within the system of the Central Bank itself. It looks like this. For example, there is a tablet, and it contains the entry “Ivan Petrov received 300 rubles”, “spent 200 on horseshoes”, “received another 500 for the harvest”, and so on. That is, the Central Bank will have a certain database distributed over many different servers in several cities that have such a record, the same everywhere, to which new-new-new records are simply added. This is essentially a crypto wallet with a digital ruble. There is no connection with negative crypto stories and darknet here.
: — If you simplify a lot, then yes, it is.
Photo: rudn.ru
: — I would say it is simpler: an ordinary user will not notice the difference in using the usual ruble, which exists in electronic banking form, and the digital ruble. It's just a new application format.
: — For the user, everything will be as simple, convenient and understandable as possible, because the Central Bank understands that ordinary people who do not understand IT use the monetary infrastructure. For example, in order to open a digital account, you can contact any bank (of those that will be connected to the digital ruble) and say: “I want to open a digital account for myself.” The mobile app will appear. Everything will work exactly the same as now with a non-cash ruble. It's just that the user will choose in his application not a non-cash account, but a digital one. Now as for the passage of money between different digital accounts. Accordingly, if an organization has a digital account, then using a QR code you can pay for any service or product (as it is now through a fast payment system). It turns out that you can transfer funds to the account of another individual. But this will only be possible between digital accounts. That's the difference.
: — Now it is difficult to talk about it. But I think that it will look no more complicated than the banking applications that we use now. Most likely, a separate application or an additional button will appear in the existing mobile application of the bank or on the website of the Central Bank, where the consumer, after confirming his identity, will be able to open an account in digital rubles. And, importantly, this account will be visible in all your banking applications, because it can only be one.
: — There are several points that raise questions. For example, according to the statements of the Central Bank, it will be possible to use the digital ruble offline. This raises the question: how exactly will we use it, if we are often talking about a bank's mobile application, which should be tied to the Internet? The second point that raises questions is the need to be authenticated at the State Services and receive an electronic signature. Accordingly, this will also cause a limitation for users, since it requires additional actions that somewhat complicate the process. In principle, most experts on the market now agree that the use of the digital ruble will be commensurate with the use of the fast payment system (FPS). As for the payments themselves, we will find out where and for what consumers will be able to pay with the digital ruble closer to 2025-2027, when testing will take place and banks will announce their decision. Maybe some kind of user training will be announced, because they will communicate not directly with the Central Bank, but with some providers — commercial banks.
: — Today it is known that testing of the digital ruble will be phased. Now we are at the first stage, when 13 banks have entered the system and are testing it. The testing itself will last until 2025-2027. We do not have any specific date when it will be completed. It is possible that it will end earlier. But for now, the timing is like this.
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— I'll give you an example. Many people, when they take some medicine and read the instructions for it, see in it a bunch of possible side effects and contraindications. They are afraid of this medicine because they think it is harmful. In fact, if you read the instructions carefully, then it indicates the frequency of side effects: one in a million, one in a hundred thousand, and so on. It turns out that the presence of a large number of side effects indicates that the medicine is well researched, and not that it is raw or bad. For banks, the introduction of the digital ruble is, of course, an interference in their professional life. So they take it very seriously. Banks will work out every detail together with the Central Bank. It is not surprising that banks are very worried about this. Their own business will suffer, because, for example, lending operations will be impossible with the digital ruble. Even Sergei Korolev, when designing his rockets, said: “If you do it quickly, but badly, people will forget what you did quickly, but they will remember that you did it badly. And if you do it slowly but well, people will forget that you did it slowly, but they will remember that you did it well.” For such an important element of the state as the currency, this is fully true.
: — In fact, banks are cunning because there is no clear instruction and procedure for working with this digital ruble. The whole difficulty lies precisely in integrating the digital ruble into existing banking applications and existing infrastructure now. And as a developer, I can say that the deadlines can constantly shift. Any exact date will be difficult to say and predict. Therefore, the timing is slightly blurred.
: — Commercial banks are afraid of digital currencies. The virtual ruble carries great risks for their existence, since all regulatory functions are transferred to the Central Bank. In principle, in some situations, the complete disappearance of a commercial bank is possible. Another paradox in the system itself is that it is not entirely clear why an ordinary user needs a digital ruble at all. If we use ordinary electronic money, then a commercial bank has the right to provide us with the opportunity to receive cashback or interest on deposits. Meanwhile, the digital ruble, in principle, does not provide this opportunity. It is not clear why ordinary users, for example, keep some of their savings in a digital ruble? Or why would they make transfers to pay with digital rubles?
: — Banks are not going anywhere anyway. But they can lose a significant part of the profit. Already now, according to some experts, it is from $50 to $250 billion a year (I'm afraid to make a mistake). This is a significant piece of the pie, which will probably go to the Central Bank.
: — Here everything depends on how the implementation of the digital ruble goes. It's an unpredictable thing. In general, yes, why not. It is easier, faster and more convenient for the state to transfer accruals in “figure”. But we must understand that any citizen at any time can transfer funds from a digital form to a non-cash one. This is done by the same transfer from one account to another account. The same thing as going to an ATM and withdrawing money, having received it in paper form. This is not even a transfer of money as such, but receiving them in a certain form: digital, non-cash, paper. A matter of convenience. Now the Central Bank declares that there will be no pressure on citizens regarding the use of the digital ruble.
: — I would probably comment on this issue more carefully. Because there are two points here. The first one is to what extent the Central Bank will be able to cope with such a volume of users, since it is responsible for those functions that used to be carried out by a larger number of commercial banks. And the second point. You can remember how the Mir system was implemented. First, all pensions were transferred to her, then state organizations began to transfer salaries to Mir. It was a must. On the other hand, it is not clear which path the state will take using the digital ruble: will the virtual currency become a tool for solving cross-border payments in international relations or will it be used more as an internal tool?
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: — Since the money is kept only in the Central Bank, the Bank of Russia itself, that is, the state, and not some private bank, is directly responsible for the stability of this account. If you come to a private bank and give it your money for safekeeping, then you must not forget that it can burst and then your money will be lost. You will lose not the funds themselves, but access to them until the deposit insurance agency deals with the situation. But it can take a long time — months, or even years. If we talk about the risks associated with the use of the digital ruble, then we are talking about the risks in relation to the entire financial system of the state. Do they exist? We live in the real world, where the state is a powerful, stable, but still created system, which may have its own needs and limitations. Yes, the state can start to somehow regulate, change the financial system. But if that happens, the private banks will be hit first. With tight financial controls, the first to suffer is the commercial bank, and hence the funds of its customers. The state is a different story. The Central Bank is the regulator. So far, he is not a player in the banking services market and does not provide them. The digital ruble is just a form of currency storage. You cannot put money into a digital account and make a deposit and make a profit from it. This is impossible. Meanwhile, for an ordinary Russian, servicing anything in digital rubles will be cheaper, but the mechanisms for using the digital ruble are limited. In this case, the funds will be protected at the state level.
: — When using the digital ruble, there will be no commissions for individuals and, in principle, the issue of paying for some purchases abroad will probably be resolved or simplified. We don't see any more difference.
: — By integrating our currency into some local sellers' points. I can only assume that some store will be able to integrate this ruble much easier.
: — Potentially, yes, it will be easier to pay for the purchase with this ruble at retail outlets where payment is currently not going through. Now not everywhere accept Mir cards. I think sellers will be able to integrate this digital ruble with a lower entry threshold.
: — It's hard to say, because this is already the risk of secondary sanctions. We will look at the situation in the world.
: — This is a very delicate question. The Central Bank does not comment on it. This is more a matter of system transparency than any particular user's security. And another nuance: as soon as a new financial technology appears, literally after it, new fraud schemes appear that can harm users. It is difficult to comment on the issue from a security point of view. The technology itself is quite young. In the world it has been used only for the last 10 years. Real live projects can be counted on the fingers of one hand.
: — Complex issue. The digital ruble involves paying for goods without a network. Such technologies already exist, and with the help of the blockchain, you can pay for the purchase offline. But how this will be implemented in the digital ruble is difficult to guess.
: — Yes, there will be no problems with that. The only thing is that we will not be able to go to an ATM and withdraw digital rubles. There will be a transition: paper rubles — into electronic rubles — into digital rubles. And vice versa — in the same order. This is both a plus and a minus at the same time.
: — For the consumer, definitely.
: — On its website, the Central Bank gives the following clarification: there will be no coercion to use the digital ruble. However, I will assume that there may be some additional bonuses or even giving away some amount of money to encourage users to switch to a digital ruble. There are already such cases, for example, in China: there, users were credited with a small amount (20 or 30 dollars) to the account so that they could try out a new form of money.
: — I don’t think there will be something other than stimulus measures. The only threat is that the accrual of pensions, scholarships and all kinds of benefits can go into the mandatory digital ruble format.