21.11.2019

Is Russia Tempted to Use a National Cryptocurrency for Strategic Reasons?

According to the Russian news website TASS, the Bank of Russia is considering the possibility of issuing a national cryptocurrency, although they are not yet able to see this as a priority for the near future.

Cryptocurrencies are being used more each time in the field of geopolitics, transcending the image of being just an experimental technology promoted by some fintechs and enthusiasts. After drawing the attention of the G20, several countries began to evaluate the possibility of issuing their own cryptocurrency, however, no powerful nation had shown a real, concrete interest … until now.

Elvira Nabiullina, head of the Central Bank of Russia believes that society is ready to use crypto, but the technology is not quite there yet

Elvira Nabiullina

In statements to the Russian press, the head of the Central Bank of Russia Elvira Nabiullina praised the technology behind cryptocurrency, putting the “crypto vs fiat” debate on the table: “It will be more convenient, it is electronic money for people, for citizens. Are we ready, as a society, to refuse cash?” – she said, flirting with the possibility of crypto winning the fight by adding that “digital currencies are in some sense the readiness of society”

Nabiullina also commented that the Russian government is evaluating this possibility even though the legal framework makes it difficult. She explained that besides the legal aspect, technologies must mature a little before cryptocurrencies can be considered a state policy:

“Indeed, the Central Bank Digital Currency cannot be realized immediately, however many central banks, including the Russian Central Bank, are exploring this possibility .. If we are talking about the national currency, which works as a whole in the country, that is, these are not private assets, of course, this requires that the technology allows ensuring reliability and continuity. Technologies must be mature, including distributed registry technologies “

Is Russia Tempted to Use a National Cryptocurrency for Strategic Reasons?

Since 2017, there has been much speculation about the government’s interest in issuing a “Crypto Ruble” but after several contradictory statements, it seems that the official position of the Russian government tends more towards the “Blockchain yes, Crypto no” kind of philosophy.

Just two weeks ago, Ms. Nabiullina talked about how the Russian bank was against the legalization of cryptocurrencies due to the risks associated with their volatility.

“We are against the legalization of cryptocurrency as a means of payment. We believe that there are big risks for those who hold cryptocurrencies, we need to protect our citizens from risky investments” She said to Russian outlet Pravo. But this problem would not apply in the case of stablecoins, much less in the case of a Central Bank Digital Currency or a state-issued cryptocurrency – that is, there is no inconsistency between this statement and the one issued two weeks later.

Vladimir Gutenev

Interest in using cryptocurrencies has increased after U.S-imposed trade sanctions intensified, affecting Russian commercial and banking activity – and draining Vladimir Putin’s patience. Russia’s State Duma member Vladimir Gutenev suggested the emission of a gold-backed stablecoin used for mutual settlements. It is important note that in february this year, an oil-backed stablecoin was also proposed

The Central Bank of Russia reported in May a growth in its gold reserves, which went from 487 to 492 billion dollars in one month. This movement has placed Russia in the number one position among the biggest global purchasers of gold.

Also, recently a senior executive of the Venezuelan government also stated that both countries are discussing the possibility of using russian Rubles and venezuelan Petros (a cryptocurrency issued by Venezuela) as a means of payment in bilateral trades

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