Russian State Duma Considers Gold-Backed Crypto For International Settlements But Prefers Fiat
Russian Central Bank Considering Gold-Backed Token
The use of cryptocurrencies for global settlements has been on the rise in recent times as JP Morgan made news this year by announcing that they would be developing a dollar-backed stablecoin for this purpose. Also, in 2018, the UAE and Qatar announced that they would be developing a token for this purpose as well and it seems that this might be spreading beyond America and The Middle East as it was reported on May 23, 2019, that the Russia Central, the bank of Russia, is considering developing gold-backed cryptocurrency for the purpose of mutual settlements across the globe.
Elvira Nabiullina, the head of the bank of Russia, made this revelation about the bank possibly being interested in getting involved in cryptocurrency. She did, however, claim that she thinks it is more important to develop international settlements using national currencies. The statement was made during a meeting of the state Duma where the governor of the Bank of Russia stated that a successful example of national currencies being used for settlement was that of the Eurasian Economic Union and it was an example of good dynamics.
“As for mutual settlements, we will consider, of course, [the] proposal on … a gold-backed cryptocurrency. But, in my opinion, it is more important to develop settlements in national currencies,” she said.
The issue of the use of cryptocurrencies for global settlements is a bit of a tricky one as well as one of national interest as in this regard, it might clash with certain interests such as that of Russia in which there is more emphasis on a national currency than simply cryptocurrency. It should be considered that Russia, like many countries, has a complicated relationship with crypto and the such, they might be more reluctant compared to a country like the UAE and Qatar who have openly embraced crypto in recent times.
Nabiullina was also quick to clarify that the Russian stance towards cryptocurrency has overall not changed and there are also no plans to allow crypto become so dominant that they compete with or replaces traditional fiat currencies.
“We do not see the possibility that cryptocurrencies could act as monetary surrogates. Definitely not in this part,” she said.
This is reflected in the actions of the bank of Russia in the past as in April 2019, a policy brief was released which looked at the potential upsides and downsides of a Central Bank digital currency. The oxide upside stated was that Central Bank digital currencies would have a lot of liquidity and might be less risky as well as reducing transaction costs. However, the anonymity associated with central digital currencies was considered a huge disadvantage.
Since then, a Russian minister has stated that the development of crypto-related policy is not as important now in Russia as in the past because cryptocurrencies have apparently lost some of their popularity.
It is under speculation how much progress will be in the use of cryptocurrencies by countries like Russia that are somewhat hostile since the rest of the world seems to be moving towards a crypto centric future. Should the use of cryptocurrency for settlements become the norm and should most countries begin issuing Central Bank digital currencies many non-crypto centric Nations might be forced to follow suit.