In order to minimise the effect of US sanctions on Russia’s economy, the Russian government is mulling to use the cryptocurrency route. According to Vladislav Ginko, a lecturer at Moscow’s Russian Presidential Academy of National Economy and Public Administration, the Russian government might be considering acquistion of Bitcoins, to switch a part of its fiat reserve to cryptocurrencies.
According to the news reports, the Russian administration would be interested in purchasing at least $10 billion in the first phase and the plan would have a staged execution given its size. Speaking to Australian cryptocurrency outlet Micky, Ginko said:
“US sanctions may be mitigated only through Bitcoin use. Because of US sanctions, Russia’s elite is forced to dump US assets and US dollars and invest hugely into Bitcoins. The Central Bank of Russia sits on $466 billion of reserves and has to diversify in case there is limited opportunities to do it.”
Despite Russia’s anti-crypto image, the above statements have higher level credibility given the Putin’s latest speech on reducing the influence of dollar as reserve currency and look for alternatives.
“We have no goal of moving away from the Dollar; it’s the dollar that’s moving away from us…
Because there’s instability when it comes to doing business with the dollar, gives rise to a desire – and it’s happening all around the world – to find alternative reserves currencies and create a financial system independent from the dollar.”
The US sanctions have hit the Russian economy hard with growth slowing down since 2014.
“Sanctions and isolation are having an impact on the Russian economy. Although Russia is not a big exporter to the U.S., cancelled energy and defence contracts in Europe coupled with bans on financing Russia’s key lenders have had an impact on the economy. What else can explain the lacklustre growth story in the country since 2014? Even higher oil prices have done little to lift the Russian economy.”
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