Russia Advocates for Cryptocurrency Use to Mitigate Sanctions Impact

Russia’s central bank has advised businesses to adopt “multiple choice solutions,” including cryptocurrencies and other digital assets, to facilitate payments with foreign partners and counteract Western sanctions imposed due to the Ukraine conflict.

Trade between Russia and countries like China, India, the United Arab Emirates, Turkey, and others that have not imposed sanctions has faced significant challenges in recent weeks. Recent Western sanctions have targeted major Russian financial institutions, including the Moscow Stock Exchange and Russia’s domestic alternative to the SWIFT global payments system.

Elvira Nabiullina, governor of the central bank, acknowledged that payment issues were a major challenge for the Russian economy. “New financial technology creates opportunities for schemes which did not exist before. This is why we softened our stance on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments,” Nabiullina stated at a financial conference in St. Petersburg.

“Different alternatives are being discussed. Businesses have become very flexible, very enterprising. They find ways to solve this and often don’t even share them with us,” she added.

Nabiullina emphasized that Russia’s business partners in various countries were under “tremendous pressure” but predicted that a new global payments system, not involving Western institutions, would gradually emerge since many countries felt vulnerable relying solely on one international payment system with no alternatives.

Nabiullina mentioned that Russia and other BRICS countries were discussing the BRICS Bridge payments system, aimed at connecting the financial systems of member countries. However, she noted that these discussions were complex and that developing such a system would take time.

Andrei Kostin, head of VTB, Russia’s second-largest lender, which recently faced sanctions on its branch in Shanghai, was present alongside Nabiullina. Kostin suggested that any information about mechanisms to facilitate international payments should be classified as a “state secret” due to its sensitivity. “I can see very well that right now somewhere at the U.S. embassy, a second secretary is sitting and writing down every public statement of ours. Maybe he is even sitting here. Whatever steps we take, we can see that the reaction [from Western countries] is very quick,” he remarked.

By fLEXI tEAM