In the document, entitled “Is there a future for central bank digital currencies,” the Central Bank of the Russian Federation outlined a number of potential benefits of CBDCs, such as their capability to reduce transaction costs in the economy, as well as provide an asset that is less risky and more liquid.
However, the Bank of Russia noted that CBDCs’ potential to minimize transaction costs can be only realized in case a technical solution for CBDCs will offer a better tool in terms of ease of use in payments and savings, as compared with fiat money and debit cards.
While acknowledging the sufficient advantages of CBDCs, the central bank pinpointed CBDCs’ lack of anonymity as the only one potential disadvantage. Specifically, the bank stressed CBDCs’ inability to provide the same level of anonymity as compared with cash.
The document notes:
“CBDC de facto cannot provide the same level of anonymity that is provided by cash. This is certainly an advantage for regulators, but can be considered a disadvantage by users, not only those who are involved in suspicious activities, but those who are concerned about privacy.”
The Bank of Russia also stated that CBDCs are able to compete with commercial bank deposits in a context of low inflation and moderate interest rates. CBDCs can become a full equivalent of cash only in the case of providing liquidity and ease of use, the bank wrote.