The CBDC Can Be Used as a Negotiation Tool Between Russia and China
A senior Russian senator said that once a digital ruble is set up early next year, Russia plans to use it to settle debts with China. This is part of Russia’s plan to reduce Washington’s financial dominance around the world.
Adoption based on use cases
Russia, like many other countries, has been making digital money for the past few years to modernize its financial system, speed up payments, and stop cryptocurrencies like bitcoin from becoming more powerful.
Even though Russia can’t use a lot of the global financial market infrastructure because of the sanctions put on Moscow for what it did in Ukraine, the central bank is already testing digital rubles with banks.
In an interview with the Russian parliament newspaper, Anatoly Aksakov, the head of the lower house’s finance committee, said that Russia is looking for other ways to do transactions.
According to Aksakov:
“The topic of digital financial assets, the digital ruble, and cryptocurrencies is intensifying in society, as Western countries are imposing sanctions and creating problems for bank transfers, including international settlements.”
He said that the next step for the currency would be to make it available for use in bilateral transactions with China, which has already tested its digital yuan.
As Western governments have pushed back against Russia, the importance of Moscow’s collaboration with Beijing has grown. Trade between the two countries has grown, and Russian firms have begun to issue yuan debt.
They would depend less on payment systems run by the West, like the SWIFT system, which many Russian banks can’t use because of sanctions. Instead, they could do business with each other more directly.
Cryptocurrencies have a reputation for being useful for non-intermediary transactions. Furthermore, many of them are currently being used by people to conduct cross-border transactions with barriers. Countries and governments looking to these solutions to solve their problems is another level of use case for this innovative technology.
Although many people are opposed to governments such as China and Russia using alternative payment methods such as CBDCs, the technology will undoubtedly find its way. It appears that more countries will follow suit in order to facilitate transaction channels.
“Discussions about digital financial assets, the digital ruble, and cryptocurrencies are heating up in society as Western countries impose sanctions and make it hard for bank transfers, including international settlements.”
He went on to say that thanks to digital targeting, money flows could bypass systems controlled by hostile nations.