Named three conditions for the use of the digital ruble

From the point of view of the national economy, the event can be considered revolutionary if we accept the definition of the Bank of Russia that the digital ruble is a new, third form of money. That is, it is neither cash nor non-cash. At the same time, as separately emphasized in the amendments to the legislation, the digital ruble is also neither a “digital currency” nor an electronic money, to which it is functionally very similar.

Unfortunately, the existing legislative definitions of “digital ruble”, “digital currency”, “electronic money” significantly confuse an unprepared person, causing him to reject and misunderstand the differences between the concepts. An ordinary person is not used to thinking about the essence of money, for him they simply exist either on an account, or on a card, or in his pocket, or, alas, they are not available anywhere. And, probably, this is the main conceptual problem of introducing a digital ruble – a misunderstanding of its essence. The digital ruble is similar to electronic money in that, just like them, it can be used through electronic means of payment, and the account on which it is stored is not a bank account, but is managed by the Central Bank. But even more, the digital ruble is similar to cash, since it is issued by the Central Bank and is an obligation of the state, and not an obligation of a credit institution, like non-cash funds.

How fair it is to consider the digital ruble the third form of money is actually a debatable question. Based on the definition, the digital ruble is rather the next form of cash circulation after gold and silver coins and paper money. Although it is assumed that cash has a physical embodiment, but we can consider that records in databases are also quite a physical embodiment.

Probably, the first negative expectation from the introduction of the digital ruble is associated with the similarity to cash and historical analogies of the introduction of paper money and various metal standards in the history of the state. Namely, that its exchange rate will differ from the exchange rate of the ruble. If we turn to the history of the introduction of paper money, for example, banknotes in the Russian Empire, then their rate was initially equal to the rate of the silver ruble, but then the unsecured issue of banknotes associated with wars and crises depreciated the purchasing power of banknotes up to one third of the silver ruble. At the same time, most of the time, the state honestly exchanged one ruble in banknotes for 100 copper kopecks, which, in turn, officially amounted to one silver ruble. But what was to be done with the poods of copper after such an exchange, because the weight of a patch of the time of Catherine was 51 grams? Such an exchange had no foreign trade reason, no sense for the domestic market.

Similar schemes were carried out by the state when the bimetallic and gold standards of the ruble were introduced. Moreover, at the junctions of monetary reforms, the exchanges of banknotes and coins have always been carried out by the state at discriminatory rates. So, for example, the very first exchange of paper banknotes for banknotes in the middle of the 19th century was carried out in the ratio of 3.5 rubles in banknotes to one ruble in banknotes. Monetary reforms in the USSR were also, to put it mildly, controversial. Surely the great-grandmothers told the modern consumer about the zero cost of “kerenok”, the unfair exchange rate of the Soviet chervonets, the grandmothers recalled the devaluation of 1961, and the parents about the “Pavlovian” reform of the exchange of 50- and 100-ruble bills.

The fact that, according to the law, it is not exchanged for a cash ruble, but only for a non-cash ruble, which, strictly speaking, is not exactly equal to a cash ruble, does not add confidence in the “digital ruble”. A cash ruble in practice costs commercial organizations 3–5% more than a non-cash ruble. What will be the exchange rate of the digital ruble against cash and what, in fact, is provided by the “digital” ruble, because it does not say “secured by the state”? The second question, however, has an answer. As a form of the ruble, it is provided by the state with gold and foreign exchange reserves exactly to the same extent as the cash ruble. What will be the course? At the moment, this question is an empty concern. The digital ruble is not officially mandatory, it is not a substitute for cash and non-cash rubles, and at the moment, customers will be able to use it only if they wish. Why? Because the digital ruble will require, firstly, an account with a bank participating in the pilot project, secondly, a modern smartphone with a high-quality camera and a bank application, and thirdly, most likely, a full account on the State Services.

To what extent can all these conditions be fulfilled for the widespread introduction of a new type of money? Not everyone in the country uses banking services in general, according to various estimates, from 80 to 85% of citizens use smartphones, presumably, 60% of bank customers have the corresponding application, and users of public services – from 55% to 65% of the population.

To use the banking application, you must be able to download and install it. In the current conditions of the dominance of foreign operating systems for smartphones, this is not always possible. Most of the major Russian banks are under sanctions, and you need to be a highly motivated mobile platform specialist to download a banking application. And this is just to register and be able to potentially use the digital ruble! The use of the digital ruble in practice will require the deployment of a reception infrastructure. Even if such an infrastructure is completely based on the use of the QR code of the fast payment system of the national payment system, then, in fact, the FPS system itself in trade is not fully deployed, and it is of limited popularity in relation to cards, since it is not particularly convenient. Most likely, however, it will be possible to start a digital ruble from a desktop computer / laptop, but there are even fewer users of the Internet bank than users of mobile applications, and sooner or later it will be possible to use the digital ruble on the Internet, although such use of it on the Central Bank website was not announced. In any case, the way for the universal mandatory introduction of the digital ruble is very, very long, and issuing it as a salary or pension, as it is now being discussed on social networks, is a technically almost impossible process.

The second fear associated with the introduction of digital money has to do with the loss of financial privacy. People are afraid of full control over their expenses and incomes, the introduction of a “social rating” with blocking accounts and individual purchases. Let’s face it: control over our accounts is already technically possible, even partially implemented. So, debtors and violators of tax laws have their accounts blocked. Only now the bank controls our non-cash funds, and the state receives information about them indirectly. Whether private control is better than public control is a matter of personal opinion and preference. Let’s leave this dispute to the liberals and statesmen. “Social rating” is more a product of dystopian science fiction writers than a real implemented system anywhere. In China, which is credited with its creation, in fact there is not even such a thing as a “social rating”, although it is foolish to deny that some of its elements have been introduced at the municipal level in some cities of the Celestial Empire.

The third concern is reliability and safety. Fortunately, our state is fully aware of the problems of information security. The training of security specialists in recent years has increased significantly. Obviously, the digital ruble platform will be no less reliable than, for example, the platform of the largest domestic state-owned banks.

Ultimately, fears from the introduction of the digital ruble are seen not in its technical or fiscal features, but in the general low level of trust in the country in public and state institutions and in business. As for the introduction of the digital ruble, everything that we know about its current implementation does not give grounds for the fears listed above. Of course, with the introduction of the digital ruble, the implementation of some of them becomes potentially possible, but all of the above, namely devaluation, unfair exchange, control over privacy, can be implemented without the digital ruble, using current forms of money – cash and non-cash. Therefore, it is more rational to transfer all fears to some next technical implementation of the digital ruble. Let’s call it “new digital ruble”, “digital ruble 2.0”, “quantum ruble” or something similar. Obviously, it will not appear in the near future, but probably in 50 years. Then we will be afraid …