Amid the ongoing sanctions, the Russian government has worked to limit the country’s dependence on the US dollar. The Foreign Office now says it is possible to partially replace the greenback in currency reserves and trade settlements with other currencies and even digital assets in the future.
Foreign Ministry official sees Russia acquiring digital assets to reduce reliance on US dollar
In its efforts to counter the negative effects of the extension of US sanctions, the Russian Federation is emphasizing “de-dollarization,” Deputy Foreign Minister Alexander Pankin said in a recent interview with the Russian Federation. Interfax press. “Targeted work” to limit the influence of the US dollar on the national economy and foreign trade operations lessens the “risk of sanctions,” added the senior diplomat.
However, the challenges associated with these sanctions remain, and Pankin said that “Russia’s settlements with major trading partners need protection and stability in the context of the currency used.” At the moment, Moscow does not face threats of sanctions with settlements and transfers in euros, but payments in US dollars. Pankin explained that these go through US banks and clearing systems that allow Washington authorities to block any transactions they consider suspicious.
Under these circumstances, Deputy Foreign Minister Sergey Lavrov believes that there is no doubt whether to further reduce the dollar’s share in the country’s foreign exchange reserves as well as its use in international settlements. Russia can replace the US fiat currency with other national and regional currencies “and in the future, probably, with some kind of digital asset,” Pankin said.
This would require significant efforts in bilateral, regional and multilateral formats, noted Alexander Pankin, who oversees international economic cooperation at the Foreign Ministry. Established models of cooperation between states and trade structures should be reorganized and appropriate mechanisms to support the functioning of new settlement systems should be introduced, the government official said.
Pankin’s comments come after President Vladimir Putin warned Washington that “the United States is cutting off the branch it sits on” by undermining the dollar in the name of momentary political gain. Speaking to CNBC reporter Hadley Gamble, the Russian leader admitted that cryptocurrency has value and “the right to exist.” In the interview, released by the Kremlin last week, he said crypto could be used for settlements in the trading of oil and other energy resources in the future.
Cryptocurrencies and related activities have been partially regulated with the passage of the Digital Financial Assets Law which entered into force this year, but Russia still needs to change its legislation to ensure full regulation. While digital coins are viewed as currency substitutes and prohibited as payment tools under current law (which asserts that the ruble is the only legal tender), the Moscow government recently indicated that it does not no plans to ban Russian citizens from acquiring cryptocurrencies.
Do you expect Russia to add digital assets to its currency reserves in the future? Tell us in the comments section below.
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