The Central Bank of Russia (CBR) is studying a proposal to create a gold-backed crypto-currency, which could be used for cross-border settlements with other countries.
The bold proposal was made by Russia’s State Duma member Vladimir Gutenev. He has suggested initiating discussion to set up national crypto-currency, denominated in gold.
Commenting on Gutenev’s proposal, the head of CBR Elvira Nabiullina said that in her opinion it is more important to develop settlements in national currencies.
The Central Bankers, in principle, are opposed to crypto’s being launched into the monetary system. They do not see the possibility that crypto-currencies, in fact, fulfill the function of monetary surrogates.
However, Gutenev explained that, unlike ordinary crypto-currencies, which are not secure because they are not backed by anything, gold-backed crypto’s have their value tied to a real asset.
They would come in the form of a so-called stablecoin which is a type of cryptocurrency but offers price stability characteristics.
Nabiullina said. She noted, however, that the regulator could study the possibility of creating stablecoins while there is a real asset behind their provision.
Boosting gold reserves in order to diversify foreign exchange and reduce reliance on the US dollar, has, of late, been part of Russia’s national policy.
According to the World Gold Council report, Russia added 55.3 tons to its vaults, bringing its vast gold reserves to 2,168.3 tons.
The World Gold Council also said last month that Russia had secured the top position among the biggest global purchasers of the yellow metal in the first quarter of the current year.
Nabiullina thinks that Russia’s gold and foreign exchange reserves will soon top $500 billion. Such a volume of gold bullion and foreign currency holdings is enough to tackle crisis-like episodes, she explained.
RT. com / ABC Flash Point News 2019.