The Bank of Russia announce bill to allow cryptocurrency to be used in export-import deals instead of Dollar - with the global reliance on the Dollar down to just about 50%... uh oh! Or is it?
The Bank of Russia made an announcement this week that they are working on a bill to allow cryptocurrency to be used in export-import deals. This decision appears to be a calculated move by Russia to get around the global dollar system and the sanctions imposed by the United States over the Ukraine war.
One of the initial benefits of this move is that it will allow Russia to circumvent the restrictions put in place by the US. By using cryptocurrency, Russia can facilitate international trade without the risk of interference from the US. This move also benefits other countries under sanctions, who might be looking for ways to skirt restrictions without invoking retaliation from the US.
Another advantage of this move is that it reduces Russia's dependence on the US dollar. By using cryptocurrency, Russia can reduce the need to hold dollars to facilitate trade. This, in turn, can reduce Russia's exposure to fluctuations in the US dollar and other economic risks associated with the global dollar system.
Yet before we get ahead of ourselves, there are also potential downsides to this move. One of the primary concerns is that cryptocurrency is still a relatively untested currency. There is the potential for high volatility, which could impact the stability of international trade. Additionally, the use of cryptocurrency could raise issues with compliance, money laundering, and taxation. It might also create additional risks for those dealing with exchanges and third-party providers.
You may wake up this morning and find your whole financial world has changed overnight... 2023 just keeps giving - We have not even discussed China... for now...
One other potential concern is that this move could create major political backlash from the US, who has taken a hard-line stance against the use of cryptocurrency in international trade. It could lead to tensions between Russia and the US and further complicate diplomatic relations.
Despite these concerns, it appears that the Bank of Russia is moving ahead with its plan to allow cryptocurrency in import-export deals. Russia has been quietly investing in cryptocurrency for several years and has formed the CBDC (Central Bank-issued Digital Currency) group alongside five other countries to develop a digital currency standard.
The Bank of Russia's decision to allow cryptocurrency in import-export deals certainly has its pros and cons. It allows Russia to get around the global dollar system and reduce the need for dollars for international trade, but it also creates a risk of volatility and potential backlash from the US. Only time will tell if this move pays off for Russia, but for now, it represents a bold move in the ever-evolving world of international trade.
