Russia’s Central Bank Plans to Use Gold-Backed Cryptocurrency for International Trade

Russia’s central bank, the Bank of Russia, will be considering issuing gold-backed cryptocurrency according to the Russian news agency TASS. The head of the Bank of Russia, Elvira Nabiullina, revealed that the bank may be interested in creating gold-pegged cryptocurrency (a stablecoin) for conducting mutual settlements. However, Nabiullina expressed her preference to develop international settlements using national currencies.

She was speaking at the meeting of the State Duma, and stated:

“As for mutual settlements, we will consider, of course, [the] proposal on … a gold-backed cryptocurrency. But, in my opinion, it is more important to develop settlements in national currencies.”

In her talk, Nabiullina also gave successful examples of using national currencies. She cited the example of using national currencies settlements under the framework of the Eurasian Economic Union (EAEU). She remarked that fiat currency settlement systems within the Eurasian Economic Union are improving and have “good dynamics.”

More importantly, Nabiullina reaffirmed that the bank’s views towards the adoption of cryptocurrencies have not shifted. The Bank of Russia is against a future where cryptocurrencies replace fiat currencies, Nabiullina noted, an opinion which aligns with some Russian lawmakers. “We do not see the possibility that cryptocurrencies could act as monetary surrogates. Definitely not in this part,” she said.

The consideration by Russia’s central bank has come as a surprise to many in the crypto community since Russia has famously been against cryptocurrencies as a nation, blocking trade exchanges from operating in the country and even blocking social media sites that covered topics related to cryptocurrencies.

The move, however, is another in a series of steps taken by the Russian government to move away from the US dollar for interstate trade and transactions. Russia’s central bank has bought over 70 tons of gold in the first four months of 2019. The purpose of this shift is to move away from the dependence on the US dollar and in turn render the sanctions imposed on Russia by the United States, meaningless.

In pursuit of independence from the US dollar for inter country trade, Russia has also been making other efforts. Iran is in talks with Russia to use the Russian Rubble. Venezuela recently revealed that they are in talks with Russia to use the Russian Ruble for country-to-country trade. Venezuela also revealed its plans to use its own El Petro, their oil-pegged cryptocurrency, for inter country trade.