Russia Launching Payment System With ‘No Restrictions’ – As per Tass news agency’s report, the Finance Minister of Russia, Anton Siluanov, announced the launch of a new payment system that will be entirely unrestrained, allowing for the use of digital currencies in cross-border payments. According to Siluanov, this system will enable two parties to agree on settlement payments without any intervention from other countries to freeze such transactions.
This development implies that the use of digital currencies in international payments in Russia will now be “bound by no restrictions.” “We are launching an alternative system of payments based on modern technologies (digital financial assets, digital currencies),” the finance minister was quoted as saying. He elaborated: “Digital currencies could be used in cross-border payments. This is just at the earliest phase of discussions, but the future lies with the use of the digital ruble, the digital yuan, and other similar currencies.”
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“This is a system of payments that is bound by no restrictions. Two parties come to an agreement, make settlement payments, and no other country could step in and freeze such payments,” Siluanov emphasized. In the aftermath of the Russia-Ukraine conflict, the US and other Western countries have imposed economic sanctions on Russia, leading to a heightened effort by Russia to minimize its reliance on the US dollar.
These sanctions have resulted in the seizure of more than $300 billion worth of Russian central bank foreign currency assets by the US and its allies. In an attempt to reduce its reliance on the US dollar, the Bank of Russia has been investigating the possibility of creating a digital ruble. A recent report by the US Congressional Research Service, published in July 2021, revealed that Russia has been accelerating its de-dollarization efforts since 2014.
The report highlights that the introduction of a digital ruble would be a crucial step in decreasing Russia’s dependence on Western payment infrastructure, which is predominantly dollar-centered. According to a report by Tass, Russian Finance Minister Siluanov disclosed during an education marathon event on Monday that the Russian ruble and Chinese yuan have already begun to replace the US dollar in trade settlements between Russia and China.
This move is part of Russia’s ongoing efforts to reduce its reliance on the dollar and promote the use of local currencies in global trade. The shift towards local currencies in cross-border payments could bring benefits such as lower transaction costs, reduced exposure to currency risks, and increased economic autonomy.
When asked if the ruble or yuan could replace the USD, the top official replied: “We are already looking at this. For better or worse, I think, this is the current situation. This is our currency. It is replacing dollar already. If we look at the structure of trade between Russia and China, now more than 70% — it is already in our national currencies.” With Russia and China being two of the world’s largest economies, this trend could have far-reaching implications for the global financial system.