The Russian government seems to be seriously considering backing the Russian rubble with gold, at least according to President Vladimir Putin’s spokesman Dmitry Peshkov.
“The issue of creating a financial system in Russia, in which the value of the ruble will be linked to gold and foreign exchange assets, is now being discussed,” Peshkov told reporters on Friday.
Peshkov was referring to remarks made by Security Council Secretary Nikolai Patrushev during an interview earlier this week.
“Experts are working on a project … to create a monetary and financial system. It is proposed to determine the value of the ruble, which should be supported by both gold and a group of goods that are currency assets, to define “the exchange rate of the ruble according to the real exchange rate of purchasing power,” Patrushev told Rossiyskaya Gazeta.
Patrushev also said that for any currency to gain sovereignty, it needs an intrinsic value, price stability and not be pegged to the US dollar. “Experts are now working on a project… to create a dual-loop monetary and financial system,” he added.
No other details about this project were given during the interview.
However, later on Friday, Bank of Russia Governor Elvira Nabiulina rejected the idea of linking the ruble to gold or other commodities.
“It is not being discussed in any way,” Nabiulina told reporters at a news conference following the central bank’s decision to cut interest rates by 300 basis points to 14%. He also stressed that the ruble must have a floating exchange rate.
Following the Russian invasion of Ukraine on February 24, the US dollar was used as an economic “weapon” to put pressure on Russia through numerous economic sanctions, analysts told Kitco News.
About $ 300 billion of Russia’s foreign exchange reserves worth about $ 640 billion have also been frozen since Moscow’s ban on the international SWIFT payment system (excluding some energy payments). This left Russia with only gold and yuan reserves.
In April, Russia’s central bank revealed that it had further reduced its US dollar reserves before invading Ukraine in February, adding that it had enough yuan and gold despite the impact of Western sanctions. The comments were made by Central Bank Governor Elvira Nabiulina in her annual report to parliament.
“Even though Western countries have frozen our reserves in their currencies, Russia still has sufficient reserves in gold and Chinese yuan,” Nabiullina said.
According to the data, the central bank reduced its share in US dollars in reserves to 10.9% as of January 1, 2022. This is lower than the 21.2% reported a year earlier.
Meanwhile, available yuan increased from 12.8% to 17.1%, and available in euro increased from 29.2% to 33.9%. The share of gold in stocks decreased from 23.3% to 21.5%.
According to the latest IMF data, Russia held almost 2,300 tons of gold by the end of January – the fifth largest holder of gold.
Russia is also cracking down on sanctions, demanding payment for gas in its own currency – the ruble. On Wednesday, Moscow cut off gas supplies to Poland and Bulgaria. Russia’s state-owned gas giant Gazprom has said it will resume supplies only when both countries pay for gas in Russian rubles.
In March, Russia signaled that it could consider accepting Bitcoin for its oil and gas exports, after the chairman of Russia’s Duma energy committee said the country would be more flexible in its payment options with ” friendly »countries. Meanwhile, “unfriendly” countries could be forced to pay for gas in Russian rubles or gold, Zavalny added.
Earlier, there was some confusion about the price used by Russia’s central bank when it resumed buying gold after a two-year hiatus.
In late March, Russia’s central bank resumed purchases of gold from local banks and said it would buy the precious metal at a fixed price of 5,000 rubles between March 28 and June 30. That was about $ 52 per gram at the time and below the market value of about $ 68.
Then in April, the country’s central bank announced that it would stop buying gold at a fixed price from local banks from April 8 and would continue its purchases at a “trading price”.
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