In order to intensify its relations with China, Russia intends to set up payments in digital ruble. With this act, the Kremlin is trying to circumvent all international sanctions against it in the context of the conflict in Ukraine. For this project to be viable, other nations would have to agree to adopt Russian electronic money in cross-border trade. The launch of the digital ruble by the Central Bank of Russia is expected next year.
The digital ruble for trade with China?
Russia seeks to circumvent all international sanctions that weigh on her. At the end of February, it illegally attacked Ukraine and, in response, the international community decided to strike with economic sanctions. Since then, the country has been suffocated and multiplies strategies to get its head above water. The Central Bank of Russia is seriously considering adopting the digital ruble as part of its cross-border trade with China.
Remember that this currency is not yet effective, since it is currently in its test phase. It is therefore the electronic version of the Russian currency and, if all goes well, the digital ruble will become official in the course of 2023. If Russia thinks of this mode of payment, it is especially in order to intensify its relations with China. With the war in Ukraine, Beijing has become its main trading partner.
The economic sanctions imposed on Russia reduce its access to the global financial system. The only way to stay the course is to find ways around the restrictions. From then on, the country will be able to enjoy the benefits of border trade with China and much more. In addition to the digital rouble, we know that Moscow has thought about cryptocurrencies recently as an alternative solution. “The subject of digital financial assets, digital ruble and cryptocurrencies is currently escalating in society as Western countries impose sanctions and create problems for bank transfers, including in international settlements,” recognised Anatoly Aksakovthe head of the Financial Market Committee in the Russian Lower House.
Trade cooperation with China in the background?
Aksakov is pleased with the monetary orientation that his country is currently taking. He is aware that with the financial flows that a probable adoption of the digital ruble and cryptocurrencies will create, it will be easier to overcome the western monetary systems. The parliamentarian also recalls that after the tests of the digital rouble, the idea will be to introduce this currency into mutual trade with “the Middle Kingdom”.
According to our colleagues from Reuters, the elected official also pointed out that Russia had other motivations. She wants end US control of the global financial system. The Russian lower house member hopes his country will inspire other countries to do the same.
Since the start of the conflict in Ukraine, China and Russia have intensified their trade relations. Like Russia, Beijing is in the testing phase of the digital version of its currency. This year, the Kremlin has issued several Chinese yuan debt securities.
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