Russia plans to make payments with China using its new digital ruble. It will be available for use in the coming year. Moscow hopes that other countries will adopt the Russian currency for trade. This will enable Russia to bypass the sanctions it has imposed on the nation over its war in Ukraine.
Russian Federation Plans to Use the Digital Ruble in Payments for China Trade
The Central Bank of Russia is gearing up to launch settlements with the digital ruble, the new incarnation of the Russian fiat currency that’s now being tested, as early as 2023. According to a statement by a prominent member of the lower house of Russian parliament, the sanctioned nation wants to use it in payments with China, which has become Russia’s main trading partner.
Russia is restricted from the international financial system because of financial restrictions imposed in response to Ukraine’s military invasion. This has forced Russia to look for alternative ways to trade with foreign countries. Moscow has other options than cryptocurrencies. The digital ruble is also an option in its attempts to circumvent the sanctions.
“The topic of digital financial assets, the digital ruble and cryptocurrencies is currently intensifying in the society, as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements,” the head of the Financial Market Committee at the State Duma, Anatoly Aksakov, recently told the Parlamentskaya Gazeta newspaper.
A high ranking lawmaker explained that financial flows are able to circumvent system controls by hostile nations, and the digital direction is crucial. The Bank of Russia will issue the CBDC, the digital currency central bank. He also stated that the Bank of Russia plans to implement it in the mutual settlements with China. Aksakov was also quoted in Reuters.
If we launch this, then other countries will begin to actively use it going forward, and America’s control over the global financial system will effectively end.
Russia’s importance in China-Russia cooperation has grown significantly due to the decline of Western markets. This includes energy exports. The trade between these two countries has increased and Russian companies started to issue Chinese yuan-denied debt. Beijing is testing its digital version of the e-CNY in China and intends to apply it for cross-border settlements.
Russia is preparing to adopt comprehensive regulations for its crypto market in the coming months, including a new bill “On Digital Currency” that will expand the legal framework established last year by the law “on Digital Financial Assets.” Russian regulators are already developing a mechanism for international crypto payments and the respective draft provisions have been already agreed upon by the central bank and the finance ministry.
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