Russia’s central bank evaluates risks and benefits of central bank digital currencies

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  • CBDC may become an alternative to cash.
  • Digital currencies issued by central banks may pose risks to the financial system in case of cyber attacks.

The Central Bank of Russia published a report on benefits and deficiencies of central bank digital currencies (CBDC). The Russian mega regulator stated in the report the diminishing role of cash and a global move towards payments digitalization. This trend prompted many regulators to consider the launch of central bank digital currency, CBDC.

“From the users point of view, CBDC might have numerous characteristics and become an alternative both to cash money and deposits,” the report states.

Among the potential benefits, the Central Bank pointed out lower transaction costs and mentioned that such cryptocurrency may become a less risky and highly liquid asset available to a broad public.

At the came time, the central bankers expressed concerns that in the environment of low inflation and low interest rates CBDC may compete with deposits in commercial banks.

Speaking about major risks, the Bank noted cybersecurity aspects and the readiness of potential users to adopt the new form of money.

“If a central bank falls victim to cyber attacks, the whole financial system will be under threat, which makes CBDC too risky in countries with immature financial institutes”.
 

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