Russia's Sberbank says proposed digital rouble may push lending rates higher

MOSCOW: Russia's largest lender Sberbank on Tuesday voiced concerns over the central bank's plans to issue a digital rouble, saying the digital unit could push lending rates higher as it could deprive the banking sector of up to $54.5 billion.

The central bank is considering issuing a digital rouble on top of existing cash and non-cash roubles to facilitate payments for individuals and businesses, but is studying potential risks that could hit bank profits.

According to Sberbank's estimates, 10pc of Russia's non-cash and cash funds could leave the banking system should a the digital rouble be launched, which in turn could lead to a 0.5pc increase in interest rates in the economy.

Around 2 to 4 trillion roubles ($27.2-54.5 billion) of funds in Russia could be transferred to the digital rouble three years after its launch, said Anatoly Popov, deputy chairman of Sberbank's executive board.

"Respectively, these same funds will no longer be available for lending, which will eventually lead to a liquidity deficit and as a consequence, rising rates," he said.

Popov suggested an alternative solution to models proposed by the central bank, which would involve existing non-cash roubles acquiring additional attributes using distributed ledgers, technology which originated from cryptocurrencies.

Russian lawmakers this year approved a bill giving cryptocurrencies legal status, but banned them from being used as a means of payment.

Public officials will have to declare any cryptocurrency holdings and digital assets from Jan. 1 2021.