The central bank in Russia has called on businesses to explore other cross-border payment systems like cryptocurrencies and digital assets to counter Western sanctions imposed on the country. Using cryptocurrencies and digital assets would help businesses settle payments with international partners.
The country is currently under Western sanctions following the conflict with Ukraine which escalated when Russia invaded Ukraine in February 2022. Central bank governor Elvira Nabiullina highlighted the importance of crypto adoption as the country faces payment challenges due to the imposed sanctions.
Russia struggles with cross-border payments
Russian businesses continue to struggle to settle payments with international partners, also including those in India, China, United Arab Emirates, and Turkey among other countries that have not imposed sanctions on the country.
This comes as key financial institutions like the Moscow Stock Exchange, and its local alternative SWIFT global payment system were slapped with economic sanctions that place restrictions on cross-border transactions.
Nabiullina acknowledged cross-border payments were a big challenge upsetting Russia. She said during a financial conference in St Petersburg that the emergence of new financial technologies creates opportunities for schemes that never existed before.
“This is why we softened on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments.”
Nabiullina.
“Different alternatives are being discussed. Businesses have become very flexible, very enterprising. They find ways to solve this and often don’t share them with us,” she added.
Some Russian firms have already started using cryptos to settle deals with international partners like those in China.
BRICS countries discuss Bridge payment system
Nabiullina revealed international partners for Russian businesses felt “under pressure” over international payments. However, they are also hopeful a new system that does not involve Western institutions will gradually emerge and bridge the problem.
She added her country and others from the BRICS that is Brazil, India, China, and South Africa were in discussions for a payment system to bridge the existing gap.
She however pointed out that achieving this is difficult and it would take time to successfully create such a system due to interference from Western countries.
Head of VTB, Andrei Kostin concurred, adding that such discussions deserve to be treated as “state secret” due to the issue’s sensitivity. VTB is Russia’s second-largest lender and was recently slapped with sanctions at its branch in Shanghai.
Cryptopolitan reporting by Enacy Mapakame