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. Last Updated: 07/27/2016

Muscovites to Receive Cash Card From City

Under a city government plan blessed this week by Mayor Yury Luzhkov, Muscovites will be issued a multipurpose magnetic card that will serve as everything from a debit card to pay utility bills to a driver's license and a health insurance ID.

Dubbed "the Muscovite's card," it will be an "electronic wallet complete with a bunch of other functions," said Svetlana Korolyova, deputy director of the city government's department of consumer markets and services, the agency overseeing the project.

Officials say getting the card will be voluntary. They also say it will be a major new source of revenue for Moscow's city budget that will bring in billions of rubles annually.

But officials say it will cost $250 million to set up such a system - money they say they are already rounding up from foreign and Russian banks. But it was not immediately clear exactly how the card will make money for Moscow.

Deputy Moscow Mayor Valery Shantsev said Wednesday by telephone that the aim of introducing such a card would be to simplify city residents' lives and give the city a larger pool of liquid cash to work with.

Shantsev encouraged Muscovites to trust in the new system and to deposit their savings in a special pooled account to be created in several designated state-owned banks, such as Bank of Moscow.

"We are not building financial pyramids," Shantsev said. "We will try to enter the third millennium in a civilized way. [Plastic cards] are the most civilized way of interaction with city services."

Participants who agree to have all or part of their income transferred to a Muscovite's card account will be able to use it to pay for purchases at restaurants and stores, for telephone bills and other utilities and even for the metro. Users will also be able to withdraw cash on their cards fro automatic teller machines around Moscow, Korolyova said.

City government-mandated discounts would come with many of these purchases, officials said, although details were sketchy.

The card will bear the holder's photograph and contain personal information including passport and medical insurance numbers and blood type. It could eventually come to serve as a driver's license against which traffic violation fines could be deducted electronically.

Korolyova said the Muscovite's card would be launched on an experimental basis in summer 1999, in three remote districts of Moscow - Zelenograd, Vykhino and Zhulyobino. If it works out well, a year later the card system will spread throughout Moscow, she said.

The card's launch will cost $250 million by the year 2000. City officials are hoping to get the money back within two years of the card's launch.

The Moscow government will invest $50 million in the enterprise, while the rest of the money will be borrowed. About $200 million will come from Moscow banks. Shantsev said Bank of Moscow had already tentatively agreed to the project.

Several banks in the German state of Bavaria have also agreed to give a loan of $20 million, and the first tranche is expected in December, Korolyova said. She did not say which banks were involved.

Still, analysts were skeptical about the feasibility of the project.

"The big question mark is the Russians' confidence in the Russian banks," said Peter Westin, an economist with the Russian European Center for Economic Policy. "I don't see how it can be profitable if it's on a voluntar y basis."

Westin said the card is "an interesting idea but an expensive one" and its profitability will depend on whether the Central Bank will strike a special arrangement with the banks involved to insure the deposits.

Moscow officials say only officially registered residents of Moscow will be eligible for the card.

"[Non-Muscovites] are not our taxpayers. We can't spend budget money on visitors," Shantsev said when asked if long-term visitors to the capital could obtain a card. "Every city builds a relationship with its residents as it desires."

Diederik Lohman, director of Human Rights Watch in Moscow, said the Muscovite card could be yet another form of official City Hall discrimination against non-Muscovites.

"Shantsev is confusing something. Many people living and working in Moscow would like to get a housing permit and to pay taxes. But it is virtually impossible," Lohman said.

"Luzhkov is protecting the interests of the Muscovites. This is good, but it has to be done according to the law."