Under heavy sanctions from the US, the potential of a value-pegged cryptocurrency could help Russia escape from the usage of the Dollar as a currency standard.
Russia’s State Duma member Vladimir Gutenev proposed the creation of this digital asset. He suggested the tying of the value to gold would alleviate issues found in cryptocurrencies, and that this offering would be likened to a stable coin.
Russia has honed in on gold reserves as a way to fight the US Dollar hegemony already. Boosting such reserves allows them to diversify foreign exchange and reduce reliance on the US dollar. It has, of late, been part of Russia’s national policy.
The central bank reported in May that their gold holdings amounted to nearly $492 billion.
The possibility of tokenizing and digitizing their stores would give them a lot more freedom and power with the value of their gold reserves. However, cryptocurrencies launched by the central bank are still being met with resistance.
The head of the Central Bank of Russia (CBR) Elvira Nabiullina said: “As for mutual settlements, we will consider, of course, a proposal on a cryptocurrency that is tied to gold. But, in my opinion, it is more important to develop settlements in national currencies.”
Nabiullina explains that the CBR is still unsure of cryptocurrencies being launched into Russia’s monetary system, but the idea of a volatility-free digital asset is more inviting.
“The CBR, in principle, is opposed to cryptocurrencies being launched into our monetary system. We do not see the possibility that cryptocurrencies fulfill the function of monetary surrogates,” Nabiullina said.
“We have prepared an analytical report and will soon present it which will analyze what cryptocurrency is, what is happening in the world, what approaches different countries to have, and what regulation is envisaged. And, if the phenomenon of cryptocurrency in any perspective may cause risks to our macroeconomic stability, we need to understand that.”
She did add, however, that the regulator could study the possibility of creating stablecoins while there is a real asset behind their provision. This is Gutenev’s point; having a gold-backed cryptocurrency would alleviate volatility concerns, and tap into a powerhouse of wealth for the Russians.
Currently, Russia is under significant sanctions from the US, and more so, suffers at the hands of the global US dollar standard. Trading done with other countries can potentially also be hampered because of the close reliance on the US dollar.
If Russia can successfully launch a gold-backed cryptocurrency, they will be able to liquefy their massive reserves and trade more freely across the border. Moreso, they could start shifting the needle away from the Dollar and towards their asset-backed currency, globally.
Last modified: March 4, 2021 2:36 PM