The introduction of the digital ruble will create new, previously nonexistent mechanisms and opportunities for economic development and investment control. This opinion was expressed by FANU “Vostokgosplan” expert, candidate of philosophical sciences Nikolay Ostarkov in his article for the “NovEco” edition.
“The modern state is increasingly becoming a fintech state and the competitiveness of the national economy in the global world depends on how developed the algorithms of credit and monetary policy, emission models, tax policy and budget filling schemes, various formats of support for industries and individual economic entities used in the system of country economy are,” says Nikolai Ostarkov.
According to him, “fintech should be understood as a new global social machine, similar to the machine of self-generating value – capital – dominating in the previous formation.
N. Ostarkov notes that the COVID-19 pandemic has accelerated the adoption of digital financial solutions. “Retail transactions based on financial technology are actively replacing conventional physical transactions in banks and are already leading to reductions in the workforce of the financial sector. At the same time, cybersecurity, effective national regulation, localization and protection of personal data are becoming more acute,” he explains.
Against this background, central banks, which, according to N. Ostarkov, until recently were not involved in the development of digital financial communications, are also coming into play.
“But the situation is changing and central banks of various countries one after another announce the creation of their own versions of digital currencies and new payment systems. The Bank of Russia is not left out either, with plans to put the digital ruble into circulation in addition to existing forms of money,” he writes.
Hence comes the digital dimension of the monetary system and its transformation into an independent form of money.
“Thus, the ruble will have three forms: cash, non-cash and digital [Bank of Russia, 2020]. There is a risk of a rapid flow of client funds from the accounts of credit institutions to digital wallets, which could lead to reduced liquidity in the banking sector. Therefore, the regulator may impose restrictions on the volume and amount of transfers in digital rubles, especially at the first stage of implementation of the digital ruble,” notes the analyst.
According to N. Ostarkov, the digital ruble will pave the way for the widespread implementation of so-called smart contracts, i.e. transactions that are executed automatically upon the occurrence of conditions determined in advance by the parties. And this, in turn, will make it possible to set the conditions for their expenditure and track the entire chain of money.
“Thus, the introduction of the digital ruble not only increases the efficiency of existing payment systems, but also creates new, previously non-existent mechanisms and opportunities for economic development and control over the implementation of investments,” the analyst notes.
Read more in the article by N. Ostarkov, an expert of FANU Vostokgosplan.