Russia is considering issuing a stablecoin backed by gold, which could be used for cross-border settlements, according to Anatoly Aksakov, the chairman of the Financial Market Committee at the lower house of Russian parliament. Aksakov confirmed the move following a recent visit to Iran where officials also expressed interest in the idea. The stablecoin would be backed by gold bars or refineries, and centers where gold is stored, and could be used as a means of payment for mutual settlements between Russia and Iran.
Background to the Gold-Backed Stablecoin Proposal
The proposal for a Russian gold-backed stablecoin was first suggested in 2019, during a meeting at the State Duma with the governor of the Bank of Russia, Elvira Nabiullina. Vladimir Gutenev, a member of the house, suggested that the central bank should initiate talks on the matter with the other BRICS countries, saying that gold is the least vulnerable asset. Anatoly Aksakov agreed that a stablecoin backed by a real asset, such as gold, would be preferable to a cryptocurrency.
Using Stablecoin to Facilitate Bilateral Trade Settlements
The idea of using a stablecoin for bilateral trade settlements has become increasingly popular in recent years, particularly among countries facing economic sanctions. Russia and Iran have both faced sanctions from the West, and have been exploring options to use decentralized cryptocurrencies to circumvent restrictions in foreign trade. In August 2022, Iran placed its first official import order using crypto, while Russia is taking steps to legalize cross-border crypto payments.
Benefits of a Gold-Backed Stablecoin for Russia and Iran
A gold-backed stablecoin could provide Russia and Iran with several benefits. First, it could help to reduce the impact of exchange rate fluctuations on their bilateral trade settlements. The Iranian rial, for example, has two exchange rates to the U.S. dollar, which can make calculations for Russian exports difficult. Second, it could provide a means of payment that is not subject to the same level of scrutiny from Western regulators as traditional financial instruments. Finally, it could help to diversify their reserves, which are currently dominated by U.S. dollars.
Conclusion
Russia’s plan to launch a gold-backed stablecoin for cross-border trade settlements could have significant implications for the global financial system. If successful, it could encourage other countries to follow suit, leading to a proliferation of stablecoins backed by different types of assets. It remains to be seen whether the proposal will be approved and how it will be implemented, but it is clear that the world of digital currencies is rapidly evolving, and stablecoins are likely to play an increasingly important role in international trade.
