Why Russia’s CBDC Will Fail as An Instrument of Control?
Russia’s Central Bank has followed many other central banks of leading economies in creating a central bank digital currency. The nation will launch a pilot platform this year, followed by testing “real world” transactions in 2022. There are implications that the project plans to control the entire financial system. Many experts have opposed the move, warning that the digital ruble will create a ‘central database’ of Russians’ spending habits.
Konstantin Ordov, a professor of financial management at the Plekhanov Russian University of Economics, has said that in that case, it will fail on both domestic and international stages. According to him, ‘to form a new instrument of control would discredit the very notion of digital transformation’.
He added that if the only advantage of a digital ruble was to know every detail about every financial transaction at any given time, there will be no interest in the technology within Russia, and no chance of it becoming a global currency.
Conversely, Ordov believes that the CBDC could have huge economic potential for Russia, saying that the bank could learn from crypto assets and explore the possibility of facilitating instant payments with low commission fees.
However, he also said that the digital ruble ‘would not be able to usher in potential benefits by itself’. He elaborated the token can only be successful by becoming an integral part of the digital economy and fully embracing blockchain and cloud-based technology, and smart contracts.