Bank of Russia, the central bank of the Russian Federation, is set to consider a proposal that, if carried out, would see the institution launch a cryptocurrency backed by reserves of gold.
Confirmed by the bank’s Governor Elvira Nabiullina on May 23rd, the review process will entail the body’s leadership exploring how such a state-sanctioned crypto could be used to facilitate payments settlements between countries, namely among the members of the Eurasian Economic Union (EEU), which Russia has been trying to solidify in recent years.
Speaking to legislators at Russia’s lower parliamentary house, the State Duma, Governor Nabiullina noted this week that the policymakers’ gold-backed crypto proposal was officially on the slate, but she — and perhaps most of her peers in the Bank of Russia’s brass — thought “it is more important to develop settlements in national currencies.”
Indeed, even though the review is notable since it’s coming from one of the world’s largest central banks, Governor Nabiullina and her staff are generally skeptical toward cryptocurrencies and are unlikely to greenlight the Duma’s token plan for the time being accordingly. As the administrator explained on Thursday:
“We are generally opposed to cryptocurrencies being launched into our monetary system. We do not see the possibility that cryptocurrencies could act as monetary surrogates.”
So, in zooming out, the Bank of Russia is simply carrying out its constitutional duties in scrutinizing the Duma’s latest crypto proposal. If it was up to the central bank, such a review likely wouldn’t have taken place any time soon — the institution undoubtedly has its own priorities it would prefer to focus on instead.
However, the episode does mark a milestone of sorts in that it involves a central bank procedurally going through the motions of considering the development of its own cryptocurrency — one of the first times that’s happened in the cryptoeconomy’s fledgling history to date.
It’s not the Duma’s first crypto rodeo, though. The body’s been exploring the creation of a digital ruble — a “cryptoruble” — since last fall. Yet that coin might liquidity rather than stability, as the ruble itself has been rather volatile over the past few years.
A Coin for a Bloc
Chatter around creating a cryptocurrency for the Eurasian Economic Union bloc isn’t new in Russia.
That’s because last December, the nation’s deputy finance minister Alexey Moiseyev declared that his country and the EEU’s four other member states — Armenia, Belarus, Kazakhstan, and Kyrgyzstan — had agreed to negotiate throughout 2019 on the creation of a crypto for the economic union.
At the time, the minister said the project’s “launch could be planned for 2020 or 2021” and called the effort “unavoidable” amid the economic sanctions slapped on Russia in recent years by Western powers, namely America.
The idea for the coin? For Russia and some of its biggest trading partners to develop a cryptocurrency they can use for further economic independence and to de-dollarize their trade activities.
For now, there’s been no word on how the token will be built, i.e. atop what blockchain and with what properties.
A Gold-Backed Token? How About an Oil-Backed One to Boot?
Former Russian energy minister Igor Yusufov has previously proposed an oil-backed cryptocurrency as one way countries like Russia could bypass sanctions.
Last fall, Yusufov said:
“[An] oil-backed cryptocurrency would allow oil producing countries to avoid any financial and trade restrictions that have become excessive in recent years, and to step up exports of oil and natural gas.”
The energy expert currently works in the private sector, so the proposition didn’t come in an official capacity on behalf of the Russian government. However, the comments alone suggest more and more influential Russian figures have started to openly look at cryptocurrencies as viable tech.