As part of its efforts to lessen Washington’s monetary supremacy, Russia aims to use the digital rouble it will introduce early next year in mutual settlements with China, a senior Russian legislator said on Monday. In order to modernize its financial system, speed up payments, and avoid the inevitable possibility of cryptocurrencies like Bitcoin acquiring influence, Russia, like many other nations, has been developing digital money over the past few years.
A recent statement by the head of the finance committee in Russia’s lower house of parliament, Anatoly Aksakov has confirmed that Russia’s hands have been cuffed by western sanctions and that it is exploring other options to access international trade markets. Authorities in Russia have been working on alternative payment methods— most of whom are convinced that the digital ruble will do the job.
The official says that the topic of cryptocurrencies, central bank-issued digital currency (CBDC/digital ruble), and digital assets like NFTs is ‘intensifying’ among the Russian citizenry. He also admitted that western sanctions have been “creating problems for bank transfers, including in international settlements.”
After joining a list of countries which are in the last phase of their CBDC trials, its central bank has started informing banks/credit institutions that it will begin connecting them to the digital ruble by the start of 2024. The advancements in the use of the digital ruble have been fast– within a week of declaring that crypto will be used for cross-border payments, there were reports of Russia allowing crypto for international mutual trade settlements.
Russia outlawed the use of cryptocurrencies as a mode of payment in 2020, however, activities like mining and trading have continued. The central bank of Russia has been skeptical about cryptocurrencies and had even suggested to the country’s lawmakers an all-out ban. However, the central bank had to take a step back, taking into account various factors like post-covid inflation and the sanctions imposed on the country due to the war in Ukraine.
Anatoly is of the opinion that once Russia begins to deploy its digital currency in the international market, other nations will also follow in its footsteps and eventually it shall end the American hegemony over the global financial system.
The new payment technologies, according to some central bank experts, would enable nations to interact more directly, reducing their reliance on Western-dominated payment systems like the SWIFT system— to which many Russian banks have been denied access as a result of sanctions— and would enable them to conduct business more freely.