Key Takeaways
President Vladimir Putin has claimed Russia never refused the U.S. dollar and was instead pushed out of it – as the nation continues to look for alternatives to the world’s dominant reserve currency.
The comments fire back at President-elect Donald Trump’s threats to impose 100% tariffs on BRIC countries attempting to create a rival currency.
In a speech at the Valdai Discussion Club, a Moscow think tank, Putin claimed that Russia did not reject the dollar and had no intention of it.
“We were merely denied of using the dollar as the payment instrument,” he said .
The Russian president noted this was “very foolish from U.S. financial authorities because its entire power, to date, rests on the dollar.”
Putin highlighted that during the four years Trump has been out of office, his successors had “done a great deal to undermine the fundamental foundations of the dollar as a global reserve currency.”
In Putin’s eyes, the Biden administration began to use the dollar as a political weapon against their adversaries.
This, the Russian President believes, has even prompted U.S. allies to “reduce their gold and foreign exchange reserves in dollars and euros.”
With increasing sanctions and a tightening economic climate, Russia has been exploring new financial alternatives to help cushion the blow.
One of these alternatives is cryptocurrencies, which Putin touted at the conference.
“Who can ban Bitcoin? Nobody. And who can prohibit the use of other electronic means of payment? Nobody. These technologies will develop, one way or another… as everyone seeks to lower costs and improve reliability,” the Russian President expressed.
Russia’s newfound love for cryptocurrencies can be seen in its push for crypto mining, which has surged after Putin legalized it in August.
The law marked a historic U-turn in the country’s view of digital assets, and Putin has been pushing forward to utilize the industry as much as possible.
In the following months, Russia has rushed to legitimize the sector with sweeping tax enforcement and regulations.
If Russia can hold a sizable amount of hashing power within the Bitcoin mining network, it could cement itself with more blagging power in geopolitical discussions.
However, Bitcoin mining requires massive amounts of power, which has raised concerns within the country.
Russia has proposed a three-tier mining subsidies plan with three different tiers of electricity tariffs, which would be applied to regions according to the amount of mining activity.
Deputy Prime Minister Tatyana Golikova said that using state subsidies for electricity could entail “not only economic losses but also negative social consequences.”
BRICS, an economic and political grouping of five major emerging economies, also serves as a crucial alternative for Russia by offering a geopolitical platform that circumvents Western dominance.
The group, comprising Brazil, Russia, India, China, and South Africa, provides the country access to alternative trade and investment outside Western institutions.
BRICS are now exploring the creation of a new digital currency, which will further help reduce their reliance on the West.
On Oct. 23, Russian presidential aide Yuri Ushakov said that the leaders of the BRICS countries had discussed the possibility of a common currency but remained tight-lipped about any updates.
“This was discussed. These are confidential matters; some of our colleagues are quite reserved about discussing these issues publicly,” he said.
While Russia has most certainly been leaning heavily into these discussions, no timelines have yet been set, and the country appears to be approaching the subject cautiously.
As the creation of a common currency continues to be explored, BRICS launched a new payment system, BRICS Pay, in October.
The system provides a decentralized alternative to traditional international payment methods, allowing the group to operate cross-border payments without relying on Western financial institutions.