Russian Banks to Lose USD 700M a Year from the Launch of Digital Ruble
Financial analysts have estimated that Russian banks could lose USD 700 million per year due to the launch of the digital ruble. The benefits for consumers using the new digital currency are not very encouraging either. They are not likely to receive any interest on their holdings or cash back. However, retailers will manage to save on acquisition fees.
Commercial Banks Could Lose 50 Billion Rubles (USD 715M)
Commercial banks could lose up to 50
billion rubles per year (almost USD 715 million) with the introduction of a
digital version of the ruble, according to an estimated forecast by financial
experts at Yakov and Partners, the former Russian division of management
consultancy McKinsey.
The retail chains could potentially
increase their income by up to 80 billion rubles per year, according to the
research team, as quoted by the Russian edition of Forbes. But consumers are
unlikely to receive any interest on their balances or cash back for their
transactions.
The digital ruble is likely to
create a niche in the domestic retail payments market and occupy a sizable
share of the card payments segment. Banks’ losses will result from shrinking
revenues from commissions for payment processing fees. Retailers will profit
from saving on acquisition fees and instant payments, which are faster than
card transfers.
The benefits for consumers are not
encouraging, as the central bank digital currency (CBDC) will not pay interest on the holdings,
unlike bank deposits. The report notes that they will also likely lose the cash
back that banks currently pay for transactions with their cards.
No Obvious Advantages for Consumers
"The digital ruble has no obvious
advantages in terms of convenience in everyday use, and international
experience shows that the reduction in the cost of acquisition does not lead to
price reductions or a slowdown in price growth, only to an increase in
retailers’ profits."
The digital ruble, issued by the
Bank of Russia, is supposed to become the third form of the Russian national
fiat, after cash and electronic money. It is meant to be used as a means of
payment and a store of value, but it cannot replace deposits or bank
payments.
The project was first announced in
October 2020, and a prototype was finalized in December of the following year.
The pilot phase started in January 2022, with the monetary authority planning
to begin trials with real transactions and users in April 2023 and looking for
a full launch in 2024.
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facing losses from the launch of the digital ruble? Please post your comments.
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