16.09.2019

CBDC Under Consideration, But Not For Near Future

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The news was reported by Russia government-backed media agency TASS on June 15.

The head of Russia’s central bank, the Bank of Russia, has said that while the launch of a central bank digital currency (CBDC) is being explored, it is not a matter for the near future.

A CBDC is a digital currency issued by a central bank that has the status of legal tender and other properties of centralized, fiat money.

TASS reports that Bank of Russia’s head Elvira Nabiullina told an audience at a student conference in the Russian city of Skolkovo that a CBDC cannot be realized immediately, but that numerous central banks — including Russia’s — are exploring the possibility.

She reportedly underscored the need to ensure the robustness of distributed ledger technology — which underlies many proposed models of CBDCs —  before any prospective currency issuance:

“If we are talking about a national currency that works as a whole in the country —  that is, not about private assets — of course, this requires the technology to provide reliability and continuity. Technologies must be mature, including distributed ledger technologies.”

Nabiullina further connected the phenomenon of CBDCs with the wider question of whether or not a given country is ready to go cash-free, noting that while some jurisdictions have made significant steps and become virtually cashless already, elsewhere cash remains in high demand:

“It’s not so much because people want to perform some dubious operations. People often value their privacy, anonymity. Of course, the spread of non-anonymous digital currencies indicate in some sense society’s readiness.”

Nabiullina further advised CBDC researchers to evaluate the advantages of CBDC issuance and weigh them against the benefits of other technologies, such as fast payments systems.

As previously reported, the Bank of Russia released a policy brief on CBDCs this April, where it argued that they could be a less risky and more liquid type of asset that could potentially reduce transaction costs in the economy. Nonetheless, the brief underscored CBDCs’ lack of anonymity as a potential disadvantage as compared with cash.

This May, Nabiullina revealed that the bank may be interested in creating a gold-pegged crypto for conducting mutual settlements with global jurisdictions.

That same month, a report from Russian government-backed TV channel RT alleged that Venezuela and Russia are discussing the opportunity to close mutual trade settlements using the Russian ruble and Venezuelan state-owned petro (PTR) cryptocurrency.

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