Cryptonews Altcoin News

Digital Ruble Rollout Will Cost Russian Banks $536m a Year – Experts

CBDC Russia

Author

Tim Alper

Author

Tim Alper

About Author

Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

Author Profile

Last updated:

April 14, 2024

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Digital Ruble Rollout Will Cost Russian Banks $536m a Year – Experts

Digital ruble rollout plans could cost the Russian banking sector a total of $536 million per year, financial analysts have claimed.

Per Forbes Russia, the nation’s retail sector could be in for a windfall if CBDC adoption plans go ahead as planned.

Experts said the retail market could expect to see annual profits rise to the tune of $857 million once the CBDC becomes widespread.

Digital Ruble Rollout Plans in Motion

The Central Bank Governor Elvira Nabiullina last week confirmed that the digital ruble will roll out “no earlier” than 2025.

This comes after the Finance Ministry suggested that “all” Russians would have the chance to use the CBDC at some point this year.

A Russian bank ATM. (Source: Valera N. Trubin [CC BY-SA 3.0])

Analysts from Yakov and Partners (formerly partners with McKinsey in Russia) said the digital ruble was on track to “occupy a niche in the domestic retail payments market.”

The experts said that the token would “partially take away” market share from bank card payments.

And within three to five years of “full-scale” adoption efforts, banks could start feeling the losses.

‘Retailers Will Be the Big Digital RUB Winners’

Yakov and Partners said Russian retail firms would likely embrace the coin, which will do away with interbank commission fees.

CBDC transactions are also instantaneous, unlike bank card payments, which can take several days to process.

However, Yakov and Partners added that for consumers, the “benefits” of the CBDC “are less clear-cut.”

Many will be hesitant to use the coin due to the fact that Russian CBDC wallets will not allow holders to accrue interest on their tokens.

A further blow could come in the form of cashback incentives. The experts opined that “banks will stop” offering cashback services “if their income falls.”

Yakov and Partners also opined that “the digital ruble has no obvious advantages in terms of ease of everyday use.”

A rollout is equally unlikely to affect prices, and would only lead to boosts in “profits for retailers.”

Banks to Go on Defensive?

The firm further added that Russian banks “can choose from two options” when it comes to safeguarding their interests.

Russia and Ukraine are targeting each other's energy infrastructure. The collateral damage is showing up in global markets https://t.co/IgqUHklEnj

— Bloomberg Politics (@bpolitics) April 13, 2024

The first would be “defensive,” and could see banks try to muscle out the digital RUB. They could look to do so with offers of higher interest payments or better cashback deals.

A second more proactive option could involve banks actively promoting “products that use the digital ruble and try to earn money from them.”

But, Yakov and Partners stated, that if the result is a stand-off between the commercial banking sector and the Central Bank, neither party would win.

Instead, “the implementation of the digital ruble will be delayed, and banks will suffer losses relatively slowly.”