The Central Bank of the Russian Federation will consider ways to use bitcoin blockchain technology when it meets in June as oil exporting countries such as Kazakhstan wrestle with eroding confidence in currency caused by low oil prices.
Grigory Marchenko, the ex-chairman of the National Bank of Kazakhstan, wondered what impact cryptocurrency would have on the country’s monetary policy as it struggles to find a solution to the negative impact of low oil prices, according to nur.kz, a Kazakhstan news site. Marchenko said the country’s currency exchange rate is tied to the price of oil.
Confidence In Central Bank Falls
Three currency devaluations in one and a half years have eroded confidence in the central bank, he said, noting that restoring confidence will take a long time.
Marchenko said cryptocurrency has entered circulation. If central banks issue e-currency in countries like Kazakhstan, e-currency will comprise a larger portion of the nation’s currency. But he wondered what impact this will have on the country’s monetary policy.
The Central Bank of the Russian Federation must submit proposals to address the monetary challenge in June, he said, noting there is a proposal to permit bitcoin blockchain technology.
CCN reported last month that the Russian bank has created a working group to evaluate the applications of blockchain technology.
Alternative Payment Systems Sought
Marchenko said there is also a system called GSMT (Global System of Money Transfer) created by Roberto Dzhior that the central bank can use to create its own currency.
IT developers want to create a financial payments system, which indicates the banking system’s shortcomings, he said.
A payment system can be built in a way that commercial banks will no longer be needed. Payments for 90% of the population could use this payment system. If someone wants to buy securities or play in the currency or derivatives markets, there are separate commercial banks they can use.
What Happened To Excess Revenues?
Kazakhstan, Russia, Azerbaijan and other oil exporting countries received excess revenues, some of which created national funds. He said some of the money disappeared; some went to consumption, some to social programs and some to “important facilities.”
The Petroleum Exporting Countries’ main mistake was failing to engage in economic diversification.
“In fact, if we were all successful and have built here this new economy that does not depend on the raw material, at a time when prices fell, there were all these tragic depreciation, because instead of oil we have exported something else," said Marchenko.
He said there is no systematic approach to overcoming the crisis caused by low oil prices.
Japan, South Korea and Singapore had sensible industrial policies. “But when the state authorities are not very competent and corruption is present, then the industrial policy leads to the fact that the situation is getting worse," he said.
Marchenko said the situation can improve, but people fear uncertainty.
The slump in oil and gas prices has put Kazakhstan’s economic resilience to the test, according to euronews. Its currency has devalued and inflation peaked at more than 15% last month.