The Bank of Russia presented a report in which it assessed the advantages and disadvantages of digital currencies whose issuers are central banks.

Thus, the document titled “Does the digital currency of central banks have a future?” Notes a gradual decline in the role of cash and digitalization of payments, in the conditions of which regulators are studying the possibility of issuing digital currencies of central banks (central bank digital currency, CBDC).

“From a user’s point of view, a CBDC can have many characteristics and
enter into circulation as an alternative to cash, and as an alternative to deposits, ”the document says.

Among the advantages of such assets, the Central Bank highlighted the possible reduction in transaction costs, and also noted that the new cryptocurrency "could become the least risky and most liquid asset available to a wide range of individuals."

At the same time, the regulator stressed that in conditions of low inflation and low interest rates, CBDC can begin to compete with deposits in commercial banks.

The Central Bank also offered to charge interest on the accounts in CBDC, which, according to the authors of the document, will make the use of a new coin as a means of saving value more attractive.

Speaking about the risks of digital currencies of central banks, the regulator notes that the release of CBDC may be premature in terms of the readiness of potential users. Special emphasis in the document is made on cybersecurity:

“In the case of cyber attacks on the Central Bank, the entire financial system is at risk, which makes the introduction of CBDC in countries with a fledgling financial institution a risky technological shift in the design of the system.”

For a regular user, such a coin, according to the authors of the report, also has drawbacks:

“CBDC will de facto not be able to provide the same level of anonymity that cash currency provides. This is certainly a plus for regulators, but can be perceived as a minus by consumers, and not only those involved in questionable operations, but also those who are concerned about the issue of non-interference in personal life. ”

At the same time, the document separately states that “today there is not a single successful, fully functioning and accessible to the general public CBDC, including one that works on the basis of data storage using the distributed registry technology. It is unclear how soon and in what form the CBDC concept will be implemented (and whether it will be implemented at all), but its potential is to some extent evaluated by many central banks. ”

Dmitry Zakharov, Director of the BCL Additional Education Program, Member of the Commission for the Legal Support of the Digital Economy at the Moscow Association of Lawyers, noted that the creation of the CBDC has been discussed at various sites for a long time and such cryptocurrencies may become a fairly successful replacement for cash in the future.

“CBDCs are interesting for central banks, primarily because of their transparency. Currently, cash transactions are almost impossible to track down, for this reason paper money is so popular in the shadow sector. Replacing cash with CBDC, which civilian participants could pay directly without banking intermediation, would increase financial control. At the same time, deprivation of anonymity for many economic entities (and this is not only about criminal elements), will certainly be a big disadvantage, which can cover all the advantages of using such CBDCs, ”said Dmitry Zakharov.

Recall that in March the Central Bank of the Russian Federation sent a draft indication to the State Duma, in which it proposed to limit the annual amount of cryptoactive assets available for purchase.

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