Russia to de-dollarise economy, eyes crypto; what could this mean

October 21, 2021
 
Speaking about the country’s efforts to reduce US dollar share in Russia’s international reserve, Aleksandr Pankin, Deputy Minister of Foreign Affairs of Russia, said the country is emphasising on “de-dollarisation” and limiting the use of the dollar in foreign trade transactions.
Pankin was speaking to local news agency Interfax. To that effect, it is possible that the ministry will replace the greenback with “some digital assets” alongside other currencies in the long term. The move will reduce risks posed by sanctions by the US, the minister said. “Payments in US dollars go through American banks and a clearing system, which allows Washington to block any transactions they deem suspicious,” Pankin said.
Russia plans to take three steps to de-dollarise its economy. First, the government will reduce its own holdings of dollars. As a measure, the Russian central bank has cut the share of dollar reserves by more than half between 2013 and 2020. Second, Russia plans to cut its share of trade done in dollars. The government has entered into agreements with several countries, including India, to use national currencies for bilateral trade. Third, the country has developed its payment processing capabilities to reduce dependence on a dollar-centred payments infrastructure.
In a recent interview with CNBC, President Vladimir Putin said cryptocurrency could be used for settlements in the future as it is very unstable at present. “I think it would be premature to use it in trading, especially when dealing with energy resources,” he said. The Russian President said the US was “cutting the branch it is sitting on” by undermining the dollar.
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