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Facing restricted access to US dollars and euros, Russia looks to use stablecoins for “cross-border settlements” with friendly nations.
Russia is reportedly working on using stablecoins as a way to circumvent Western sanctions. The country’s deputy Finance Minister Alexey Moiseyev recently revealed this crypto strategy adoption. According to Moiseyev, Russia wants to use stablecoins to make payments with “friendly countries”. Due to sanctions, the country finds it nearly impossible to access Western fiat, such as US dollars and euros. However, Russian state news agency Tass reports that creating bilateral platforms with “tokenized instruments,” including stablecoins, will address this problem. In Moiseyev’s own words, per Tass:
“We are currently working with a number of countries to create bilateral platforms in order not to use dollars and euros. We offer mutually acceptable tokenized instruments that will be used on these platforms, which are essentially clearing platforms that we are currently developing with these countries.”
Furthermore, the Russian high-ranking government fiscal official also added:
“Stablecoins can be pegged to some generally recognized instrument, for example, gold, the value of which is clear and observable for all participants.”
Russia to Facilitate Additional Regulations to Accommodate Stablecoins
Moiseyev’s statement suggests that the Russian government must institute additional regulations to make the stablecoin agenda feasible. This includes properly establishing the crypto “cross-border settlement” platform between itself and friendly nations/allies. The Russian finance ministry and its central bank previously agreed that the stringent Western sanction measures makes crypto inevitable.
Western mainstays such as the US and the European Union imposed severe sanctions on Russia following its attack on Ukraine back in February. Many of these sanctions attacked the fiscal structure of the Russian economy. They include the ousting of Russian banks by the European Union from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system. In addition, the US Office of Foreign Assets Control blacklisted numerous Russian entities and nationals. Still, several Western businesses boycotted Russia by suspending operations or pulling out completely.
Russia Under a Pile of Increasing Western Sanctions
The Russian economy has naturally taken a massive hit since then, and talks of ‘deep and prolonged economic damage’ are more frequent. For instance, likely analytical scenarios suggest that the economic contraction will occur faster next year. Furthermore, these suggestions also posit that the Russian economy may take at least a decade to recover fully. A mildly-minded scenario envisages the Russian economy regressing next year at 8.3% below last year’s level. Meanwhile, an aggressively-minded scenario forecasts the plunge in 2024, at 11.9% below 2021’s level.
All scenarios also predict that the sanctions imposed on Russia will intensify as more countries likely join in. This is a direct reference to reports that EU members are looking to wean themselves totally off Russian energy exports. Such a decision may render irrevocable damage to the Kremlin, as oil and gas supply are the lifeblood of the Russian economy.