Financial analysts say plans to introduce the digital ruble could cost the Russian banking sector a total of $536 million a year. According to Forbes Russia, the country’s retail sector could face windfall profits if plans to adopt CBDCs are implemented as expected.
Experts say the retail market can expect an increase in annual profits to $857 million once CBDCs become commonplace.
Plans to implement the digital ruble
Last week, Central Bank Governor Elvira Nabiullina confirmed that the digital ruble will be introduced “not earlier” than 2025. This came after a suggestion by the Finance Ministry that “all” Russians will have the chance to use the CBDC later this year.
Analysts at Yakov and Partners (formerly McKinsey partners in Russia) said the digital ruble is on track to “occupy a niche in the domestic retail payments market.”
Experts said the token will partially take away market share from bank card payments. Within three to five years of a full-scale rollout, banks may begin to experience losses.
“Retailers will be big winners for RUB”
Yakov and Partners said Russian retail businesses are likely to adopt the coin, which will abolish interbank commissions. CBDC transactions are also instant, unlike bank card payments, which can take days to process.
However, Yakov and Partners added that for consumers, the “benefits” of CBDC “are less clear.” Many people will be hesitant to use the coin due to the fact that Russian CBDC wallets will not allow holders to accrue interest on their tokens.
Another blow could be the incentive to return the cash. Experts have expressed the opinion that banks will stop offering cashback services if their revenues fall. Yakov and Partners also expressed the opinion that “the digital ruble has no obvious advantages in terms of convenience for daily use.”
Implementation is equally unlikely to affect prices, and would only lead to an increase in retailers’ profits.
Will banks go on the defensive?
The company further added that Russian banks can choose between two options when it comes to securing their interests.
The first would be defensive in nature, and would provide for banks to try to get ahead of the digital RUB. They could do so by offering higher interest rates or better cash back offers.
The second, more proactive option could involve banks actively promoting “products that use the digital ruble and try to make money on them.”
However, Yakov and Partners said that if the result is a dispute between the commercial banking sector and the Central Bank, neither side will win.
Instead, the implementation of the digital ruble will be delayed, and banks will suffer losses relatively slowly.
The Central Bank began accelerating the implementation of CBDCs in 2023 in response to the US- and EU-led sanctions packages. Moscow hopes to convince international trading partners to abandon USD-based trade in favor of the digital ruble and other CBDCs.
Meanwhile, Nabiullina said the process of fully implementing and adopting the digital ruble will likely take five to seven years. Russian banks have already expressed skepticism about CBDCs, although most major players are participating in pilots.
