The Russian government is searching for new ways to bypass traditional international payment systems in order to process payments. There is a new proposal that involves using cryptocurrencies (including Bitcoin) for international payments. Despite the fact that the Russian Central Bank has not given any comments on that matter, there could be a consensus to start using digital assets for cross-border payments.
Russia Considers Cryptocurrencies for International Payments
Russia decided to attack Ukraine on February 24th, 2022. This event has pushed Western countries to impose sanctions on Russia. These sanctions have been not effective in trying to force Russia to stop the war in Ukraine. Indeed, Western economies have been affected even more than the Russian economy.
The Ruble has been traded at multi-year highs against the U.S. dollar (USD) and the Euro (EUR). Gas and oil prices have also skyrocketed in Europe, and the EUR has fallen to one of the lowest points against the U.S. dollar in years. Additionally, inflation rates in Europe have been at their highest level in years as the European Central Bank (ECB) continues to expand its balance sheet.
With this combination of things, the Russian government could be planning to embrace cryptocurrencies for international payments. According to a recent report released by Reuters, Ivan Chebeskov, head of the finance ministry’s financial policy department, said that they are discussing the idea of using cryptocurrencies to settle international payments.
Ivan Chebeskov was quoted as saying:
“The idea of using digital currencies in transactions for international settlements is being actively discussed.”
Virtual currencies such as Bitcoin (BTC) or Litecoin (LTC) can be used to process cross-border payments in minutes and without relying on traditional payment systems. However, there must be an agreement reached at the Central Bank level in Russia before this proposal becomes a reality. The important thing to note here is that the possibility to start using virtual currencies exists, which could settle a precedent for other countries to do so in the future.
It is also worth pointing out that El Salvador and the Central African Republic became the first countries in the world to accept Bitcoin as legal tender. Therefore, there is still a long way for other countries to start doing the same. That means that it might be difficult for Russia to start using virtual currencies as a means of settling translational payments.
Over the last few weeks, we have seen Bitcoin (BTC) falling to $29,000 and staying close to that level at the time of writing. Ethereum (ETH), the second-largest cryptocurrency in the world has been hit the most among the top 7 over the last 7 days. ETH lost 10% of its value and it is now traded below $1,800.
This weekend, cryptocurrencies are being traded mostly stable. It would be very interesting to see what happens to digital assets this week as LUNA released its new 2.0 version and as some countries could release preliminary inflation data for the last month.