The Bank of Russia has dismissed the effect that a future confiscation of Russian assets in the U.S. might have on the nation’s economic stability. Elvira Nabiullina, governor of the bank, stated that Russia has been diversifying its asset portfolio for many years and that the assets to be seized weren’t in use anymore. Bank […]
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Russia’s FATF Rating Downgraded Over Crypto Regulation Shortfalls
The Financial Action Task Force (FATF) has lowered Russia’s rating owing to insufficient oversight of cryptocurrencies, as indicated by regional coverage. According to RBC, this downgrade highlights escalating worries about the country’s capacity to oversee and mitigate dubious transactions within the rapidly expanding realm of digital finance. Russia’s Financial Strategy Challenged by FATF Downgrade The […]
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30 Banks Participating in Russia’s Central Bank Digital Currency Pilot
The number of banks participating in Russia’s central bank digital currency pilot has increased to 30. Seventeen banks have signed an agreement with the Bank of Russia to participate in the digital ruble program. They will join 13 other banks, about 600 citizens, and 30 trading and service companies that are already testing Russia’s central bank digital currency.
17 Banks to Join 13 Other Banks in Digital Ruble Pilot
Russia’s central bank, the Bank of Russia, announced on Wednesday that 17 additional banks are gearing up to join its digital ruble pilot program. These financial institutions have already signed an agreement with the Russian central bank and are now implementing the necessary systems to participate in the upcoming expanded pilot.
Currently, 13 banks are already participating in the digital ruble pilot, along with around 600 citizens and 30 trading and service companies. These participants are already actively involved in testing operations with real digital rubles. The 13 existing participating banks are Alfa Bank, Dom.Rf Bank, Ingosstrakh Bank, VTB Bank, GPB Bank, Qiwi Bank, Ak Bars Bank, MTS Bank, Promsvyazbank, Sovcombank, Sinara Bank, Rosbank, and TKB Bank.
The 17 banks that will join them in the extended digital ruble pilot are AB Bank Russia, Bank Orenburg, Russian Standard Bank, SME Bank, Rosselkhozbank (Russian Agricultural Bank), Tinkoff Bank, Expobank, Novikombank, Bank RRB, Kuban Credit Bank, Tochka Bank, Primtercombank, Rosdorbank, Sberbank, CB Center-Invest, RNKB Bank, and Dengi.Mail.Ru.
The Bank of Russia website details various stages of the digital ruble project. Starting with the creation of a prototype platform in December 2021, the central bank tested and refined the digital ruble prototype throughout 2022. Based on these test results, a roadmap for implementation was developed. August 2023 was the start of piloting operations “with real digital rubles involving a narrow circle of clients of 13 banks,” Bank of Russia described.
“The digital ruble is a digital form of the Russian national currency that the Bank of Russia plans to issue in addition to existing forms of money,” Russia’s central bank explained, elaborating:
The ruble will have three forms: cash, non-cash and digital. They are equivalent: one cash ruble is equal to one non-cash ruble, as well as one digital ruble.
What do you think about the number of banks participating in Russia’s central bank digital currency pilot? Let us know in the comments section below.
Russia’s Yuan Shift: EBRD Economist Warns of Waning US Dollar Dominance
In a recent interview, the European Bank for Reconstruction and Development’s (EBRD) chief economist, Beata Javorcik, highlighted a notable trend: Russia’s growing inclination to transact in the Chinese yuan. This shift, the economist emphasized, could challenge the dominance of the U.S. dollar. “[The] increase in the usage of the Chinese currency is coming at the expense of the U.S. dollar,” Javorcik remarked on Wednesday.
EBRD Report, Chief Economist Beata Javorcik Emphasizes Russia’s Shift to Chinese Yuan
Beata Javorcik, the European Bank for Reconstruction and Development’s (EBRD) lead economist, touched on Russia’s increasing preference for the Chinese yuan in trade dealings. Her observations coincide with a period where the U.S. dollar’s stake in global reserves has slipped below 60%. Concurrently, Russia and numerous BRICS countries are veering away from leveraging the greenback in trade.
“You see that this increase in the usage of the Chinese currency is coming at the expense of the U.S. dollar,” Javorcik told Bloomberg on Wednesday. She further noted that sanctions have “given impetus to countries to think about diversifying invoicing currencies, and long-term this could erode the dominance of the dollar.”
Javorcik recently collaborated on a study highlighting the growing trend of countries adopting the Chinese yuan and forging swap lines and trade pacts with China’s central bank. China’s imports from Russia have recently skyrocketed, hitting a record peak. Speaking to Bloomberg, the economist mentioned that while new swap arrangements with the People’s Bank of China are emerging, many were in place before the conflict between Ukraine and Russia.
“Many of these swap lines, they predate the war,” Javorcik told the publication. “War has given impetus to using the Chinese yuan as a currency,” she added.
Javorcik’s perspective isn’t universally shared. Benn Steil, the economist and director of International Economics at the Council on Foreign Relations, opined in August that the Chinese currency is “not a serious threat to dollar hegemony.” However, in September, Alexander Wise, a strategic analyst at JPMorgan, highlighted potential threats to the U.S. dollar, outlining two specific scenarios in a company report.
Concurrently, Jahangir Aziz, an economist with JPMorgan, observed in the same study that the “importance of the dollar has declined significantly from 2014 to 2022.” In the report jointly penned by Javorcik and EBRD economist Maxim Chupilkin, they explain that while the greenback’s global dominance aids in imposing sanctions on Russia, it’s a double-edged sword.
“The dominance of the U.S. dollar makes international sanctions more effective, as firms engaged in international trade overwhelmingly require payments to be cleared through the U.S. banking system,” the authors wrote. “At the same time, the use of economic sanctions may over time reduce [the] attractiveness of the U.S. dollar as a vehicle currency and hence its dominance.”
What do you think about the EBRD economists’ opinions about the U.S. dollar becoming less attractive in trade? Share your thoughts and opinions about this subject in the comments section below.
Russia’s Central Bank: BRICS Currency Requires Consent of Many Parties, Faces Implementation Challenges
The governor of Russia’s central bank says the creation of a common BRICS currency “requires the consent of many parties.” While emphasizing that the proposed BRICS currency “deserves attention,” the Russian central bank chief cautioned that this project is challenging and “will be quite difficult to implement.”
Bank of Russia Governor on BRICS Currency
Bank of Russia Governor Elvira Nabiullina talked about the proposed BRICS currency on the sidelines of the central bank’s annual Financial Congress, which took place on July 6-7 in St. Petersburg. The BRICS economic bloc comprises Brazil, Russia, India, China, and South Africa.
The BRICS currency initiative is expected to be one of the topics discussed at the upcoming BRICS leaders’ summit in South Africa that’s scheduled for Aug. 22-24. The proposal gained much attention over the past week when Russian news outlet RT reported that Russia has confirmed the BRICS is launching a gold-backed currency. However, no BRICS officials have officially announced or corroborated the news.
The Russian central bank chief told reporters (translated by Google) that the idea of a BRICS currency “deserves attention.” However, she stressed that this project “will be quite difficult to implement,” emphasizing: “Like any idea of a supranational currency, it requires the consent of many parties. This is not a simple project at all.” Nabiullina continued:
Therefore, we are still working and concentrating our efforts on the development of bilateral settlements using the national currency, the development of the infrastructure that connects our payment systems, what businesses need today.
While RT claimed that Russia has confirmed that the common BRICS currency will be backed by gold, a top official of the New Development Bank, also known as the BRICS Bank, has stated that the creation of any alternative to the U.S. dollar is a medium to long-term aspiration. According to him, “No one is suggesting right now that BRICS will form an alternate currency.” Nonetheless, many people expect a common BRICS currency to erode the dominance of the U.S. dollar.
What do you think about the statements by Bank of Russia Governor Elvira Nabiullina about the proposed BRICS currency? Let us know in the comments section below.
Russia’s Largest Bank to Allow Retail Investors to Trade Digital Assets
Majority state-owned lender Sberbank is preparing to allow Russian citizens to buy and sell digital assets. Private individuals will be provided access to its proprietary blockchain platform as early as this month, a top executive of the bank announced.
Sberbank to Open Digital Assets Platform to Private Individuals
Retail investors will be able to transact with digital financial assets (DFAs) on the distributed ledger platform built by Sberbank by the end of the current quarter, according to the Deputy Chairman of the bank’s Board, Anatoly Popov.
“If we talk about individuals, then in the second quarter, in June, we believe this function will be open,” Popov said, quoted by the Tass news agency. They will have the opportunity to buy digital financial assets, sell them and exchange them for fiat, he detailed.
DFAs are a relatively new financial instrument for Russia which was regulated with the law “On Digital Financial Assets” in 2021. Unlike decentralized cryptocurrencies, they have an issuing entity and represent tokenized traditional assets such as gold, for example.
The Central Bank of Russia (CBR) has already authorized several operators of DFA platforms such as the tokenization service Atomyze, the fintech company Lighthouse, Masterchain, and Alfa-Bank. Sberbank, which is Russia’s biggest bank by assets, was added to the regulator’s register in March 2022. Last week, the bank opened access to its in-house decentralized finance (defi) platform for developers.
Since it was licensed, Sberbank has issued DFAs for billions of rubles, Popov noted. In May, the CBR said it expects a significant growth in the Russian digital assets market. The forecast came after in a single month, April, seven DFA placements were made for a total of around 1 billion rubles ( million).
Russia has been taking steps to develop this regulated market but it’s yet to define the legal status of crypto assets like bitcoin. Several bills aiming to achieve that are now under review in parliament with sanctions pressures working in favor of legalizing crypto payments, at least in cross-border settlements, and regulating certain activities such as crypto mining.
Do you think retail investors in Russia will benefit from the access to Sberbank’s DFA platform? Tell us in the comments section below.
Russia’s Rosbank Launches Crypto Payments Solution for Cross-Border Settlements
Rosbank has become the first large Russian bank to offer clients an option to use cryptocurrencies in international settlements. The solution, provided in tandem with a Russian fintech, is mostly intended to meet the needs of businesses working with foreign partners.
Russian Companies to Be Able to Pay Suppliers With Cryptocurrency Through Rosbank
One of Russia’s systemically important banks, Rosbank, is launching a solution for cross-border settlements in cryptocurrency, the business daily Vedomosti reported. According to a representative of the financial institution, it is now conducting pilot transactions with corporate and private clients.
The bank maintains that the service, which is the first of its kind in the sector, is compliant with current Russian legislation and the requirements of the Central Bank of Russia (CBR). The latter remains opposed to the free circulation of cryptocurrencies in the country but has been open to allowing their use in cross-border transactions as long as they are carried out outside of the Russian financial infrastructure.
Тhe law “On Digital Financial Assets” prohibits Russian residents from accepting digital currencies as payment for goods and services but lawmakers in the State Duma are considering amendments expanding the legal framework’s coverage to include cryptocurrencies and legalize crypto transactions under “experimental legal regimes.”
Rosbank’s new service is supported by the fintech platform B-crypto, which specializes in processing cross-border settlements in digital currencies. When a Russian company chooses to pay a foreign counterpart with cryptocurrency, this must be reflected in their contract and the invoice issued by the supplier must indicate a wallet address and the crypto amount. Rosbank accepts fiat deposits while B-crypto is responsible for crypto conversion and payment processing.
Faced with unprecedented Western sanctions over the invasion of Ukraine, the Russian government and businesses have been exploring ways to circumvent financial restrictions imposed by the West, including through wider use of national currencies and cryptocurrencies.
A body representing Russian businesses recently urged President Putin to help with legalizing crypto settlements in foreign trade. Earlier, officials in Moscow admitted that Russian companies are already using crypto in cross-border payments despite the lack of comprehensive regulation.
Do you think other Russian banks will offer crypto payment solutions to their clients? Tell us in the comments section below.
De-dollarization Has Already Started, Says Russia’s Foreign Minister Lavrov
The process of de-dollarization has practically started, according to Russian Minister of Foreign Affairs Sergey Lavrov. Moscow’s top diplomat is convinced that Russia’s position on the matter is shared by many other countries while the West is undermining the role of the U.S. currency.
Russia’s Sergey Lavrov Announces Beginning of De-dollarization of Global Economy
Russian Foreign Minister Sergey Lavrov believes that the de-dollarization of the world economy is already in motion, backed by a number of nations. Speaking during the latest assembly of Russia’s Council on Foreign and Defense Policy think tank on Saturday, he stated:
De-dollarization has begun, both in practice and in conceptual speeches.
Lavrov highlighted Brazil’s suggestion that the BRICS summit in August should consider protecting financial transactions within the organization representing the leading emerging economies and safeguarding its New Development Bank from “abuse” stemming from the “dollar’s persistent role.”
“We are putting forward many other initiatives concerning this issue,” the diplomat remarked, quoted by the Tass and RIA Novosti news agencies. He also emphasized that the Russian Federation’s position in that regard is shared by many allies and like-minded friends.
Russia has been the target of unprecedented sanctions over its invasion of Ukraine, including financial restrictions that have limited its access to global finances and markets. Lavrov noted that the West is now sending emissaries to other countries, demanding that they sever most, if not all, of their trade, economic and investment ties with Russia.
“They [Western nations] know well how to play on the difficulties they themselves create for other countries. And they will probably have a certain result, a certain benefit in the short term,” Sergey Lavrov elaborated.
“But in the long term, they, and first and foremost the Americans, are hewing down the bough on which they are sitting … including the roles of the International Monetary Fund, the World Bank, and the role of the dollar in the world’s economy,” he concluded.
Do you think the leading role of the U.S. dollar in the global economy is threatened? Share your thoughts on the subject in the comments section below.
Push to Use National Currencies in SCO Cannot Be Stopped, Russia’s Lavrov Says
Efforts to transition to trade in national currencies in the Shanghai Cooperation Organization (SCO) can no longer be stopped, according to Russian Foreign Minister Sergey Lavrov. During a meeting with his colleagues in India, Moscow’s top diplomat also discussed the similar initiative within BRICS.
Sergey Lavrov Convinced SCO Countries Will Switch to National Currencies, Won’t Rule Out Single Fiat
There is understanding about increasing the use of national currencies in settlements between the member states of the SCO, Russian Minister of Foreign Affairs Sergey Lavrov said after conferring with counterparts in Panaji, capital of the Indian state of Goa.
To achieve that, Lavrov believes participants can apply practices that are being formed in the Eurasian Development Bank, the Asian Bank for Reconstruction and Development, and the New Development Bank established by the BRICS bloc.
“All this was discussed. All of this is very relevant. All this is now being considered by the relevant departments, ministries of finance, central banks,” Lavrov was quoted as saying by the Tass news agency. He also emphasized:
This work is underway, and, in general, it cannot be stopped.
The head of the Russian diplomacy also reminded about the proposal put forward by President of Brazil Luiz Inacio Lula da Silva on the transition towards payments in national currencies in the BRICS group of emerging economies (Brazil, Russia, India, China, and South Africa).
The topic has been also discussed at the SCO meeting, including the creation of “some kind of aggregated currency” which, in Lavrov’s words, cannot be ruled out either.
“The main thing now is to consider practical issues that will make it possible to protect the cooperation of independent states,” he said, accusing the West of abusing its position in the global economy and the reserve currency status of the U.S. dollar and the euro.
The SCO, the world’s largest regional organization which unites China, Russia, India, Pakistan, and several Central Asian nations, is preparing to ditch the dollar in favor of settlements in the national currencies of members, its Deputy Secretary General Grigory Logvinov unveiled in a recent interview.
Despite intentions to move away from the greenback, however, the introduction of a common currency is not yet being considered by its members, the Russian diplomat noted. BRICS, arguably the world’s largest bloc by gross domestic product (GDP), also intends to initially promote the use of its national currencies.
Do you think the SCO and BRICS will eventually introduce new international currencies? Share your thoughts on the subject in the comments section below.
‘Evil Crypto’ Can Be Used in Foreign Trade, Russia’s Deputy Finance Minister Says
Cryptocurrency may be bad for investors but it can be useful in international settlements, according to a top government official in Moscow. Russian authorities intend to set up a special committee that would issue permits to operators employing crypto in foreign trade transactions, he indicated.
Russia Plans to ‘Experiment’ With Cross-Border Crypto Payments Amid Sanctions
Crypto assets can be used in certain scenarios, Russia’s Deputy Finance Minister Alexey Moiseev commented during an economic forum in Moscow. Speaking at the “Banks. Transformation. Economy. 2.0” conference, he was quoted by the RIA Novosti news agency as saying:
Of course, crypto is generally evil. I believe that people who invest their savings there take a very big risk … But there may be individual situations in which crypto can be used.
Moiseev made it clear he was referring to Russian foreign trade activities, which are currently restricted by Western sanctions. He also reminded that a draft law designed to regulate this matter is still under consideration in the State Duma, the lower house of Russian parliament.
“We’ll experiment … If the bill is adopted, a certain committee will be formed, including representatives of a number of ministries, the Bank of Russia and law enforcement agencies, which will give permission to individual operators to use cryptocurrency in foreign trade transactions,” the high-ranking representative of the executive power elaborated.
Alexey Moiseev suggested that the legislative process necessary to provide the legal basis for the trials will likely be delayed until the end of the year. Government officials and lawmakers have been debating various aspects of Russia’s regulatory approach toward cryptocurrencies for quite some time.
Differences between the Russian Ministry of Finance, with its more liberal views on the issue, and the Central Bank of Russia, which maintains a rather conservative stance on crypto regulations, impeded progress for months.
Since sanctions pressure on Russia increased following its invasion of Ukraine, however, they agreed “it is impossible to do without cross-border settlements in cryptocurrency,” as Moiseev revealed in September, last year.
At the same time, most state institutions are now against legalizing transactions with decentralized cryptocurrencies like bitcoin in Russia, except for the purpose of facilitating international payments under special legal regimes that are yet to be established.
Do you think Russia will try to bypass financial restrictions by using cryptocurrencies in cross-border payments? Share your thoughts on the subject in the comments section below.