Russia Deploys Anti-Fraud System for Digital RUB

The Central Bank of Russia has officially implemented an anti-fraud protection system for the digital RUB, aiming to protect citizens and businesses from fraud. The measures came into effect on February 23 and were codified in a Central Bank decree issued late last year.

New Anti-Fraud Measures

Deputy Sergei Gavrilov, Chairman of the State Duma Committee on Property, Land and Property Relations and a member of the Central Bank's National Finance Council, said that the new measures will help protect transactions using the digital RUB. Accordingly, financial institutions have the right to suspend suspicious transactions for two days to check their validity. During this time, customers will receive a notification and will be able to confirm the transaction the following day.

If the customer does not respond, the transaction will not be executed and the funds will remain in the sender's digital wallet, helping them avoid unwanted consequences and ensuring the safety of their assets.

Protecting Businesses and Commercial Users

These protections are primarily aimed at commercial users, businesses, and B2B transactions. This is part of the Central Bank's broader strategy to emulate the protection mechanisms already implemented in peer-to-peer transactions by 2023.

On July 25, 2024, the Central Bank of Russia introduced an automated system for detecting suspicious transactions, which alerts customers to the risk of fraud. The system also creates a "cooling off period", helping users avoid making hasty decisions due to pressure from fraudsters or careless actions in stressful situations.

Digital RUB Deployment

The Central Bank of Russia plans to roll out the digital RUB nationwide by the end of 2024, although no specific date has been announced. Financial institutions such as the Federal Treasury and the Ministry of Finance have completed testing the integration of the digital RUB into the budget system.

However, the plan has faced opposition from commercial banks and some social media users. Some are concerned that the CBDC could be tightly controlled by the Central Bank, even allowing unused tokens to be deleted. There are also suggestions that the government could force pensioners and welfare beneficiaries to use the digital RUB. In response, the Central Bank has stated that the use of the CBDC will be entirely voluntary.

Liquidity Concerns

Some experts have expressed skepticism about the impact of the digital RUB on the financial system. Denis Astafyev, founder of investment firm SharesPro, believes that the Central Bank needs to make major technical and organizational changes to ensure widespread adoption of the digital RUB by businesses, citizens and the banking system.

Astafyev also warned that the transition to CBDC could reduce liquidity for commercial banks, as part of the money would be transferred directly to the Central Bank's platform instead of circulating in the traditional banking system.

Roadmap

The Central Bank of Russia has begun testing the digital RUB since August 2023 and plans to expand the scope of implementation by 2025. Major domestic banks such as Sberbank, VTB and T-Bank (formerly Tinkoff Bank) are collaborating to support the process.

Despite the controversy surrounding CBDC, the Central Bank of Russia remains steadfast in its plans to implement a digital RUB, hoping to improve the efficiency of the financial system and ensure user safety.