Deputy Finance Minister Alexey Moiseyev wants to create bilateral clearing platforms for cross-border settlements in stablecoins with Russia’s friendly countries. Since the country has no recourse to either dollars or euros, these are to be collateralized with gold, for example.
The Finance Minister announced the new goal of the Bank of Russia and the Ministry of Finance at the 7th Eastern Economic Forum in Vladivostok. In order not to have to deal with dollars or euros, a platform for cross-border payments with stablecoins is now being considered, state media agency TASS reports. The decision actually contradicts the law signed by President Vladimir Putin in July that bans digital payments in the country. Apparently, meanwhile, Russia has come to the conclusion that blockchain technology cannot be dispensed with for cross-border settlements.
Stablecoins: a neutral means of payment
Russia has a real need for the use case of stablecoins in the real world. The country cannot pay for its imports in dollars or euros. The ruble is still functioning, but it is putting tremendous pressure on Russian exporters due to low liquidity, exchange rate risks and general macroeconomic conditions. With the major reserve currencies no longer available, an alternative must be found.
Stablecoins are designed to keep their value stable in the base currency. They are pegged – algorithmically or collateralized – to a common asset such as the US dollar or gold. The largest stablecoins in the crypto market are currently issued by centralized companies, such as Tether’s USDT and Circle’s USDC. But Russia would use its own platform.
“We are currently working with a number of countries to create bilateral platforms so that we don’t have to rely on dollars and euros. Stablecoins can be pegged to a widely recognized instrument, such as gold, whose value is clear and observable to all participants.” – Alexey Moiseyev, Deputy Finance Minister of Russia
Cross-border payment platforms
The creation of clearing platforms with friendly states will establish assets for collateralization and thus simplify cross-border settlements. Russia has been talking about this for years, but now the urgency seems greater and the political will stronger. The Finance Ministry hopes to resolve the outstanding issues during the fall session of the State Duma. The State Duma is the lower house of parliament, which will also meet as early as this week.
A similar discussion is ongoing in the U.S. House of Representatives. Earlier this year, the ranking member of the U.S. Senate Banking Committee, Pat Toomey (R-Pa.), submitted a legislative framework for stablecoins (also known as the “Stablecoin TRUST Act”). A conclusion is expected later this month after heated debates.