As Russia continues to push for de-dollarization, the Ministry of Foreign Affairs (MFA Russia) is reportedly considering replacing the US dollar with not only traditional Fiat but also digital currencies.
In Tuesday’s interview with the local news agency Interfax, Deputy Foreign Minister of Russia Aleksandr Pankin reiterated the country’s plans to reduce the share of the US dollar in Russia’s international reserves and use it in dealing with foreign partners.
The official said that Russia’s MFA does not rule out the possibility of replacing the US dollar with “some digital assets” in addition to other currencies:
“In the long run, it is possible to replace the US dollar with other currencies, national and regional, as well as some digital assets.”
Mr Pankin added that such compensation would require significant government efforts, including the renewal of established models of cooperation between jurisdictions and businesses, as well as the creation of new mechanisms for new settlement systems.
De-dollarization due to US government sanctions
The official noted that Russia’s campaign against dollarization is in line with the country’s efforts to avoid the challenges posed by US government sanctions.
“US dollar payments go through US banks and a clearing system that allows Washington to block any transactions it deems suspicious.”
Pankin said. He added that the Russian government has not encountered such problems with the euro or other fiat currencies and does not yet plan similar measures for any other national currencies.
Russia has been considering steps to reduce the US dollar’s share of the US $ 186 billion in its national social fund for several years. Local authorities plan to dramatically increase their holdings of the Chinese yuan and invest in gold.
Recent remarks by the Ministry of Foreign Affairs further strengthen Russia’s apparent interest in using cryptocurrencies for international settlement. Last week, Russian President Vladimir Putin said it was “a little early” to use cryptocurrencies to settle oil trade. The president also acknowledged the potential of a cryptocurrency for a global transfer of funds.
Whatever Russia’s stance on cryptocurrencies so far, the current dollar situation may lead to the introduction of digital assets into the country’s financial system.