Last year, when the Bank of Russia issued a paper proposing a central bank digital currency (CBDC), there was considerable pushback from the banking sector. Following consultations, there has been some compromise on the digital ruble. However, an updated paper published yesterday still shows little concern about the potential migration of bank balances to the central bank. And several other features give the central bank considerable control.
There are plans to introduce laws to allow the central bank to ban certain institutions, companies or individuals from accessing the digital ruble. That’s in marked contrast to physical cash, which is open to all and will likely decline in use once there’s a digital version.
Even if a ban aims to censor fraudsters or tax evaders, once the law is on the books, there’s the possibility of using it for other purposes to exclude people from the economy. If the law is too widely applied, it could encourage greater black market use of cryptocurrencies.
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