© Reuters. FILE PHOTO: Anatoly Aksakov, Chairman of the Economic Policy Committee of the State Duma, attends a meeting of the St. Petersburg International Economic Forum (SPIEF) in St. Petersburg, Russia, June 16, 2022.REUTERS/Maxim Shemetov/File photo
MOSCOW (Reuters) – After launching the digital ruble early next year, Russia plans to use the currency in mutual settlements with China, a senior Russian lawmaker said on Monday, as it seeks to weaken Washington’s global financial hegemony.
Like many countries, Russia has been developing digital currencies over the past few years to modernize its financial system, speed up payments and thwart the threat of cryptocurrencies such as Bitcoin gaining influence.
The central bank was already testing the digital ruble with banks when Russia was sanctioned for its actions in Ukraine, which left Russia without access to much of the global financial market infrastructure.
With this in mind, Russia is looking for alternative ways of conducting transactions, Anatoly Aksakov, chairman of the Finance Committee of the lower house of the Russian parliament, told the Russian parliament newspaper in an interview.
“The topic of digital financial assets, digital rubles and cryptocurrencies is currently intensifying in society as Western countries are imposing sanctions and creating problems for bank transfers, including in international settlements,” Aksakov said. Digital direction is key, he added, as money flows can bypass systems controlled by unfriendly states.
Central banks and governments have been at loggerheads over cryptocurrency regulation. Aksakov said he hopes to introduce legislation this year.
He added that the next step for the digital ruble will be mutual settlement with China, which has already tested its digital yuan.
“If we roll this out, then other countries will start using it aggressively and U.S. control of the global financial system will effectively end,” Aksakov said.
Cooperation with Beijing has become increasingly important for Moscow as Western countries shun Russia. Trade between the two countries has increased, and Russian companies have begun issuing yuan-denominated bonds.
Some central bank experts also said the new technology would mean countries would be able to transact with each other more directly, reducing reliance on Western-dominated payment channels such as the SWIFT system, which many Russian banks cannot use due to sanctions.