Governor Elvira Nabiullina said Russia’s central bank will only fully adopt a central bank digital currency (CBDC) if the digital ruble meets certain conditions in the pilot tests.

Nabiullina spoke to the National Duma Committee on Financial Markets on Monday about the digital ruble and revealed more details on the CBDC implementation, local news agency Interfax reported.

The Central Bank of Russia will only take over the CBDC after ensuring that the ruble can be easily converted from cash to a digital and cashless ruble, and only at a one-to-one ratio, she said.

“It has to be a real official ruble, with no discounts or anything,” noted Nabiullina, adding that the central bank should test the digital ruble at least once a year before actually introducing it.

Nabiullina stressed that the digital ruble shouldn’t affect local inflation. “We assume that the introduction of the digital ruble will not accelerate inflation in any way or affect inflation,” she said.

Russia saw inflation spike amid the COVID-19 pandemic. According to official data from the national statistics agency Rosstat, the inflation rate in the country has reached its highest level in almost six years and rose by 8.1% in October. The Russian central bank is expected to lower the inflation rate to 5% or 6% in 2023 at the earliest.

The governor’s remarks came after Russian lawmakers released a series of documents outlining key aspects of the country’s monetary policy for 2022 and 2023-2024.

One of the documents stated that the Russian central bank plans to introduce a digital ruble “gradually expanding its scope”. The bank did not rule out “constraints and constraints” in the early stages of CBDC implementation.

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The central bank fears that the digital ruble could cause an increase in refinancing costs for banks while “reducing the effectiveness of the monetary policy transmission mechanism,” but stated that this can be resolved if the digital ruble is more accessible and widely used Audience. The bank also identified potential privacy issues related to CBDC transactions.

The legislator has recommended a detailed assessment of such risks in order to ensure the sustainability of the banking sector and macroeconomic stability.

As already reported, the Russian central bank plans to start initial tests for the digital ruble as early as 2022 in cooperation with large local banks such as Sberbank and VTB, as well as private banks such as Tinkoff Bank.

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