The US Dollar for the past several years has been used as the world’s reserve currency. However, the status of the USD currently seems threatened by rising digital currencies. Various countries are looking to opt for Bitcoin instead of USD as the reserve currency.
Russia is the latest country to have voiced its plan to cut ties with the reliance on USD as the reserve. The Russian Ministry of Foreign Affairs is looking to replace the USD with other fiat currencies and digital currencies.
Speaking to a local news agency, Interfax, the Russian minister of foreign affairs, Aleksandr Pankin confirmed the country’s stance on the USD as the reserve currency. He claimed Russia is looking to reduce its use of USD for international settlements. He also confirmed the possibility of replacing the USD with digital assets in the long term. He said, “It’s possible to replace the U.S. dollar with other currencies, both national and regional, as well as some digital assets in the long term.”
Will Russia really replace the USD for crypto?
While the replacement is possible, it will take some time. The government recognizes that it has to reestablish new corporation models with existing partners and businesses. It will also have to create new payment settlement systems that will use the new currencies introduced.
While the country is fully committed to changing the dollar as the reverse, it understands it won’t happen easily. Work has already been in progress for some time.
Russia has considered cutting ties with the USD for several years. One of the most serious proclamations however came in the mid of year when the national welfare fund announced it would reduce its holdings on the US dollar. Instead, it would be going for the Chinese Yuan and gold investments.
The latest remarks by the Foreign Affairs shows how serious Russia is in its pursuit to change the foreign reserve. It also shows its stance towards digital currencies. The country has a positive approach towards digital currencies and is willing to use them for international settlements. The president of Russia, Vladimir Putin also recognises the potential of digital currencies. Even though he claimed that it’s “ a bit early” to start using cryptos for settling oil trades, he believes in its potential for global funds transfer.
Why are cryptos best placed to replace USD as Russia’s reserve currency
The main reason behind the need to replace USD as a reserve is the prospects of economic sanctions. The US uses its power as the international reserve currency supplier to control international trade. It can therefore sanction any country it feels does not meet various provisions.
The International Monetary Fund (IMF) has confirmed various countries are looking to replace the USD as both a local and reserve currency. Almost all of them are looking towards adopting Bitcoin or the CBDC.
Bitcoin is a decentralised currency that has no single authority. It means no country would have to deal with economic sanctions or unfavourable trade provisions. Bitcoin, therefore, levels the world trade area for increased business and cooperation among countries.
