Introduction of a CBDC will not impact inflation, the governor said
Bank of Russia governor Elvira Nabiullina stated that the country will adopt Digital Ruble after the central bank can ensure that cash can easily be converted into Digital Ruble at a one-to-one ratio.
“It should be a real full-fledged ruble, no discount or anything else,” Nabiullina explained, according to reports from local news agency Interfax.
Appearing before the State Duma Committee on Financial Markets earlier this week, Nabiullina explained that the Bank of Russia has several conditions outlined for the effective functioning of a central bank digital currency (CBDC) in the country.
The former Minister of Economic Development clarified that a Digital Ruble will only be introduced if all these conditions are fulfilled in the pilot tests. The Bank of Russia expects to test the CBDC for one year before a potential rollout, she added. According to previous reports, Russia is expected to commence piloting its CBDC by early 2022.
Nabiullina further clarified that the bank does not expect the upcoming Digital Ruble rollout to affect local inflation:
“Our assumption is that the introduction of the digital ruble will not accelerate inflation in any way, and will not affect inflation.”
Inflation has been a major cause of concern in Russia since the pandemic led to a massive spike in the domestic inflation rate. The country reported its highest inflation rate in six years at 8.1% in October 2021.
The governor’s comments come weeks after the Bank of Russia released documents outlining its monetary policy for the next year. One of the documents explains that the central bank is looking to adopt a CBDC “gradually, progressively expanding the scope of usage.”
A central bank digital currency is the digital representation of a country’s fiat currency issued by its central bank to enable faster transactions, better trackability and more control over an economy’s monetary policy. China’s Digital Yuan was the first CBDC issued by the central bank of a major bank though talks of a Digital Dollar, a Digital Euro and a Digital Ruble are picking up steam.