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“Only drug lords and arms dealers are interested.” Does Russia need a crypto-gold ruble under sanctions

Institute for Research and Expertise VEB.RF proposed create a cryptocurrency ruble in Russia, which will be pegged to the gold rate. This will create a new national financial system instead of the one that has now developed due to sanctions, analysts say. Economists interviewed by RTVI were skeptical of the idea of ​​VEB.RF experts, specifying that gold may well be under sanctions restrictions, and such ideas should have been implemented before they were introduced.

Doctor of Economics, Vice-Rector of the Financial University under the Government of Russia Alexei Zubets

US cryptocurrencies cannot be blocked, but instead, their restrictions will affect conversion, exchange for currency. That is, no one will do anything to the owners of cryptocurrency wallets, but as soon as the process reaches conversion into dollars, euros, etc., operations in the West will be blocked. Therefore, this approach is suitable only for settlements with friendly countries: gold, rubles, and dirhams are suitable here. [валюта ОАЭ]and Indian rupees, and Iranian rials.

But then the question will arise – why trade with friendly countries in cryptocurrency? This can also be done in the national currency, because it will not fall under the sanctions. And if we talk about the cryptocurrency gold ruble, then it should have been done many years ago, even before 2014. During the NEP, the USSR switched to gold rubles, which were converted around the world. And now there is not much point in this, because the European Union will try to ban transactions with Russian gold in the next package of sanctions. And then it turns out that in the West, including the United States, Russian gold will not circulate, and it will be impossible to convert it into dollars and euros.

The West deliberately cuts us off from itself, any opportunities for financial interactions are reduced to zero. It follows from this that the only option to maintain the stability of the Russian financial system is to switch to the currencies of non-Western countries. This, in fact, Russia has been actively engaged in lately. That is, we are talking about Turkish lira, Chinese yuan, Indian rupees and so on. Plus, the Central Bank promised to expand the use of the Mir card. I believe that we will gradually refuse to communicate with the West on this issue.

The Central Bank may approve the cryptocurrency or related options. But this is convenient for transactions of individuals, not companies. If we are talking about some sanctions stories, then it is impossible to bypass them with the help of cryptocurrency. Gold is not a legal form of money circulation in Europe and the USA, that is, it must be converted into dollars or euros. And here the problems begin, Russian gold can even be confiscated. Here we stumble upon an attempt by Western countries to strangle the Russian financial system.

On the other hand, if we talk about some long stories, then today the desire for peace is absolutely transparent in the West. The trinity that came to Kyiv [президент Франции, канцлер ФРГ и премьер Италии] together with the President of Romania, obviously brought some kind of proposal for peace.

Press Service of the Government of Ukraine

When the story with the Donbass ends, Ukraine is unlikely to have the strength for organized resistance. This means that all these long tools to overcome sanctions may simply not be needed, because the West will be inclined to negotiate. I think this will happen at the beginning of 2023, when it becomes clear that Ukraine is out of the game, including for economic reasons. It will take a lot of money to restore it, trillions of dollars. No one has such funds – neither Russia, nor the United States, nor Europe. Add to this the fact that the industry in the east of Ukraine is destroyed, there is no way to collect taxes, large external debts, a significant decline in the population. Under these conditions, Ukraine will not be able to exist as an independent state, and therefore will have to negotiate.

President of the Center for Infrastructure Economics Vladimir Kosoy

This scenario is slightly original, because Russia began to have problems with the sale of gold. Moreover, the question is now [в Европе] that all Russian gold could be included in the sanctions list. And against this background, as I understand it, there is a similar brain activity about what can be done with Russian gold.

The problem is that gold has value only when it is stored in bars, in other cases it is of interest only to jewelers on the black market. From the point of view of bank reserves, this is nothing, which is why such ideas appear. But I am skeptical about such things. In addition, the topic of a special offshore zone for trade with China raises questions Why is Beijing doing this?

I understand why Russia is wary of the Chinese yuan, it is no safer to work with it than with the dollar or the euro. But China will simply say: let’s trade in yuan, and this will be a completely logical step. Because if Russia decided to abandon the dollar and the euro, then China does not mind offering to trade in yuan. But in such transactions there should be an interest of both parties. Russia’s interest in creating an offshore zone is understandable. China’s interest is not.

Trading the Russian cryptocurrency ruble may be of interest to drug lords or underground arms dealers. Why this country, I do not understand. Even if we are talking about friendly countries, for example, the United Arab Emirates or China, they have their own currencies, which are quite strong. They do not need Russian rubles, even if in cryptocurrency. They will say: let’s switch to our currency. And why should they get involved in the games proposed by Russia? For me it’s a mystery.

For trade with the CIS countries, this is of little interest, because our turnover there is not very large. If we talk about Iran, then we will not buy oil. In theory, we can buy watermelons from them, and they can buy weapons from us. But why cryptocurrency with the volume of trade that we have now? For this, clearing [безналичных] operations.

What is the future of international payments proposed by VEB.RF analysts

Vyacheslav Prokofiev / TASS

VEB.RF experts, according to RBC, stated in their report that the sanctions against Russia, in addition to hitting the economy, are pushing the country to switch to a completely different, alternative national financial and monetary system. In their opinion, international settlements in the near future will take into account the cryptocurrency, and barter and clearing transactions.

Also, the analysts of the state corporation suggested creating a digital ruble tied to the gold rate, transactions with which, in their opinion, would not be able to block the United States. Such a “golden ruble” will be used for external payments, including between third countries without the participation of Russia, experts say.

VEB.RF experts also expressed other ideas. For example, they considered it necessary to create a national crypto-exchange (because the digital currency, according to the authors of the report, is “a real alternative to the dollar in modern circumstances”), relying on the experience of Iran in this matter.

In addition, the analysts continued, it is necessary to develop a system of international settlements of the Central Bank with friendly countries in national digital currencies based on distributed ledger technologies. But this issue requires political agreement, they note. As an example of such a mechanism, they cited the Inthanon-LionRock project initiated by the Hong Kong Monetary Authority and the Bank of Thailand in May 2019. It involves the creation of a common platform for multiple settlements in digital currencies of central banks, based on a single multicurrency system, RBC notes.

To create an alternative financial system, Russia needs to use barter schemes and create new offshore zones, including for trade with China and give its residents a special status, analysts say. In the future, they consider it appropriate to consider a blockchain unit of account within the framework of BRICS (similar to the transferable Soviet ruble).

The VEB.RF report also proposes to connect the Mir card to transactions with foreign currencies of friendly countries and support at the government level the connection of Russian banks, including sanctions, to the UnionPay system and turn the Financial Message Transfer System (the Russian analogue of the SWIFT system) into an international payment system in the CIS and Greater Eurasia, including China and other friendly countries.

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