The Russian government is looking for new ways to bypass traditional international payment systems to process payments. There is a new proposal that involves using cryptocurrencies (including bitcoin) for international payments. Despite the fact that the Central Bank of Russia has not commented on the matter, there could be a consensus to start using digital assets for cross-border payments.
Russia is considering cryptocurrencies for international payments
Russia decided to attack Ukraine on February 24, 2022. This event prompted Western countries to impose sanctions on Russia. These sanctions have not been effective in trying to force Russia to end the war in Ukraine. In fact, Western economies are even more affected than the Russian economy.
The ruble traded at multi-year highs against the US dollar (USD) and the euro (EUR). Gas and oil prices have also soared in Europe and the EUR has fallen to one of its lowest levels in years against the US dollar. In addition, inflation rates in Europe are at their highest levels in years as the European Central Bank (ECB) continues to expand its balance sheet.
With this combination, the Russian government could plan to introduce cryptocurrencies for international payments. According to a recent report released from Reuters, Ivan Chebeskov, head of the Department of Fiscal Policy at the Ministry of Finance, said they are discussing the idea of using cryptocurrencies to process international payments.
Ivan Chebeskov was quoted as saying:
“The idea of using digital currencies in transactions for international settlements is actively discussed.”
Virtual currencies like Bitcoin (BTC) or Litecoin (LTC) can be used to process cross-border payments in minutes and without depending on traditional payment systems. However, before this proposal becomes a reality, an agreement needs to be reached at central bank level in Russia. It is important to note here that there is an opportunity to start using virtual currencies, which could set a precedent for other countries to do so in the future.
It is also worth noting that El Salvador and Central African Republic were the first countries in the world to accept bitcoin as legal tender. So there is still a long way to go before other countries start doing the same. This means that Russia might find it difficult to use virtual currencies as a means of processing conversion payments.
Market update
Over the past few weeks, we’ve seen Bitcoin (BTC) fall to $29,000 and remained close to that level at the time of writing. Ethereum (ETH), the second largest cryptocurrency in the world, has been hit the hardest in the top 7 over the past 7 days. ETH lost 10% of its value and is now trading below $1,800.
Cryptocurrencies are trading steady for the most part this weekend. It would be very interesting to see what happens with digital assets this week as LUNA released its new version 2.0 and some countries might release preliminary inflation data for the last month.
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