President of the Russian Central Bank, Elvira Nabiullina, believes there is no immediate need for Russia to explore launching a sovereign digital currency. Despite having studied and researched these topics, the central bank doesn’t believe there are any obvious benefits to the economy, as reported by TASS, October 10, 2019
Happy With Current Monetary Regime
Making a decision this big requires an intensive cost-benefit analysis to understand the net result. In Russia’s case, they do not believe the benefits offered by a sovereign digital currency outweigh the systemic risks.
Russia has taken an outlook that is eerily similar to India’s stance; the government does not support the legalization of cryptocurrency, but sees promise in blockchain and other forms of distributed ledger technology (DLT).
All of this is in stark contrast to China, which has been studying digital currencies and has decided to launch a national digital currency sometime in the near future. It would be interesting to understand what China sees in this proposition that Russia does not acknowledge, and vice versa.
Despite their indifference to sovereign digital currencies, Russia is one of the few countries that has not seen Libra as a threat to the global monetary system. They have openly stated that they see no grounds for barring Libra from operating in the country.
The country has had troubles with miners as it was revealed that the Russian Customs Service was tipped off about the illegal import of ASIC miners. For a brief period, there was talk of a mining ban in the country.
Is the National Digital Currency Hype Real?
There are so many services across the world, from Google Pay to India’s UPI, that are bringing new depths of efficiency micropayments and the digital economy.
Many countries believe that this technology, which relies on the current banking system, will be the real key to making payments and remittances simpler.
Speculation around China’s digital currency is that they are trying to establish an easier settlement method to overpower the dollar’s hegemony on global finance. If this is a realistic scenario, the case of sovereign digital currencies may be overestimated.