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Russia is exploring the use of digital currencies such as crypto for international settlements. The Central Bank of Russia is reportedly drafting a law to pave the way for the use of digital assets for external payments.
While speaking at an event with representatives of the New People party, the Chairman of the Central Bank, Elvira Nabiullina, revealed that the regulator opposes the use of crypto within the state. However, it is open to using it for international settlements, Nabiullina revealed. Therefore, separate Russian institutions are likely to be established to carry out cryptocurrency mining and transfer to foreign entities. According to the report, these groups will also work with other forms of digital finance.
The Central Bank is currently consulting with the government on which institutions will be allowed to engage in mining and crypto transfer to foreign structures. According to the report, state-owned institutions will be the first to be entrusted with this task, with private enterprises being added to the picture in due course.
Russia has also been making strides in the development of a Central Bank Digital Currency (CBDC). Russian banks are expected to start testing the digital ruble CBDC on customers once the regulatory framework is adopted by the end of April-May.
Russian to Use the Chinese Yuan in Settlements with Asia, Africa, and Latin America
Additionally, Russia has also been calling for the internationalization of the Chinese Yuan. Russian President Vladimir Putin recently stated that around two-thirds of the trade between Russia and China happens with the yuan and ruble. He further expressed his country’s support for using the yuan in settlements between Russia and the countries of Asia, Africa, and Latin America.
The shift towards digital currencies and the internationalization of currencies such as the Yuan could have significant implications for the global financial system. The use of digital currencies for international settlements could make transactions faster, cheaper, and more secure. However, there are also concerns around the volatility of crypto and the potential for it to be used for illegal activities. The use of CBDCs also raises questions about privacy and surveillance.
Despite these concerns, the move towards digital currencies for international settlements seems to be gaining momentum. It remains to be seen how quickly this shift will take place and what impact it will have on the global financial system.
More Countries Exploring the Use of Cryptocurrency
The move toward digital currencies for international settlements is not unique to Russia. Several countries around the world have been looking to reduce their dependence on the US dollar for trading. Countries such as the UAE and India are in talks to use Rupees to trade non-oil commodities. So far, two countries, El Salvador and the Central African Republic (CAR), have legalized cryptocurrency as legal tender. Several other countries recognize crypto and are working towards creating laws governing the use of Bitcoin and other cryptocurrencies. This shift has opened the door for crypto to be accepted for settlements, with some countries exploring the use of CBDCs as well.
As Russia moves forward with its plans for using crypto for international settlements, it is likely that other countries will follow suit. The use of digital currencies could transform the way international transactions are conducted and ultimately lead to a more decentralized and secure financial system.
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