Russian Central Bank Considers “Color-Coding” Digital Ruble Tokens for Traceability
The Russian Central Bank is exploring the possibility of “marking” or “color-coding” digital ruble tokens to enhance traceability in transactions involving Central Bank Digital Currencies (CBDCs). Deputy Governor Alexei Zabotkin stated that while the bank is not currently developing color-coded coins, they are open to considering this option at a later stage of the pilot. The use of color-coded tokens would enable the bank and other stakeholders to track the allocation of funds for specific purposes, such as the distribution of state budgets. Zabotkin emphasized the need for careful consideration of the functionality related to color-coding CBDCs. The bank’s white paper suggests that digital ruble tokens could be marked to set spending conditions, specifying which categories of goods and services they can be used to purchase.
Concerns and Theoretical Contexts
There have been skeptical voices among Russians regarding the digital ruble, expressing concerns about restrictions on the use of money reducing its liquidity. Zabotkin acknowledged these concerns and highlighted the importance of preserving the value of money that can be spent as desired. Currently, the discussions around color-coded CBDCs remain in theoretical contexts, and the bank has been considering the use of CBDC smart contracts since 2021. Such tokens could be tracked throughout their entire passage in the Russian financial system, offering enhanced transparency.
Hot Take: Russian Central Bank Contemplates Traceable Digital Ruble Tokens
The Russian Central Bank is exploring the potential adoption of color-coded digital ruble tokens to enhance traceability in CBDC transactions. While the bank is not actively developing these tokens at present, they are open to considering the option in the future. By “coloring” digital ruble tokens, the bank and other parties can monitor the use of allocated funds for specific purposes, such as state budget distribution. However, concerns about restrictions on money usage have been raised by skeptics. The bank emphasizes the need for careful consideration of the functionality related to color-coding CBDCs, which remains in theoretical contexts. If implemented, these tokens could be tracked throughout the Russian financial system, providing increased transparency.
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