Dollars

Russia wants to move yet further away from the US dollar, and plans to use its central bank digital currency, the digital ruble, to trade with its BRICS partners.

As Washington-Moscow relations remain frosty amid talk of possible further sanctions on Russia, BRICS central bankers are looking for more ways to trade outside the US-dominated global financial system.

“The digital ruble is first and foremost an international project,” said Timur Aitov, a member of the Russian Chamber of Commerce, chair of the Financial Market Security Committee, in an interview with Russian media outlet Plus World.

China, Russia’s closest trading partner, is also moving away from dollar-denominated trade at an increasingly rapid speed. Its central bank recently included cross-border digital yuan adoption in the Communist Party’s 15th five-year plan.

BRICS alignment plans

Aitov said there was a lack of domestic demand for a Russian CBDC. He said he agreed with CBDC-sceptical comments made last year by German Gref, the CEO of Sberbank, Russia’s biggest bank.

“I don’t understand why an individual needs the option to use a CBDC,” Gref said in July. “And neither do banks or businesses. I still don’t really understand why we need the [digital ruble].”

But Aitov said BRICS countries need CBDCs to trade with one another, which is why the Russian central bank is targeting a September 1 rollout for the digital ruble.

He noted that the Reserve Bank of India has recommended including a proposal to link BRICS nations’ CBDCs on the agenda of the upcoming BRICS summit in New Delhi.

The Indian central bank reportedly thinks its plan will help facilitate cross-border trade and tourism payments.

“This is the first time such a proposal for a unified system has been formally submitted for consideration within BRICS,” said Aitov. “If it’s approved, the digital currencies of Brazil, Russia, India, China, and South Africa will unite, using a shared infrastructure and unified regulatory standards.”

Aitov added that Russian commercial banks would prefer to use ruble-pegged stablecoins.

But BRICS central bankers say they largely oppose using stablecoin-powered solutions.

“Stablecoins raise significant concerns for monetary stability, fiscal policy, banking intermediation, and systemic resilience,” the Indian central bank’s Deputy Governor T Rabi Sankar said in December.

His comments closely echo remarks made by the Russian central bank governor Elvira Nabiullina in October.

When asked about her stance on stablecoin issuance in Russia, Nabiullina said she had no objection to such coins being used in cross-border trade, but ruled out stablecoins’ use in domestic scenarios.

Combating fraud

Aitov did, however, say that the digital ruble rollout would have some significant positive benefits for domestic users: namely, when it comes to battling corruption and fighting fraud.

“Officials could be monitored, because it will be clear who has stolen digital rubles and from where,” he said. “Citizens will also be happy — particularly those who have lost their digital rubles to fraudsters.”

Earlier this month, Anatoly Aksakov, head of the State Duma’s Committee on Financial Markets and the chief architect of Russia’s crypto legislation, predicted the eventual “demise” of Bitcoin.

“By all the fundamental laws of economics, [cryptocurrencies] are bound to collapse sooner or later,” he said

Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.