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Russia aims to replace US dollar reserves with digital assets in the long term

As Russia continues to push for de-dollarisation, the Ministry of Foreign Affairs (MFA Russia) is reportedly considering replacing the United States dollar with not only traditional fiat currencies but also digital currencies.

Russia’s Deputy Minister of Foreign Affairs Aleksandr Pankin in an interview with local news agency Interfax on Tuesday reiterated the country’s plans to reduce the US dollar’s share in Russia’s international reserves and its use in settlements with foreign partners.

The official added that MFA Russia is not ruling out the possibility of replacing the US dollar with “certain digital assets” with other currencies:

“It is possible to replace the US dollar with both national and regional currencies, as well as some digital assets in the long term.”

Punkin said such a replacement would require significant efforts from the government, including rebuilding established cooperation models between courts and businesses, as well as creating new mechanisms for new settlement systems.

Russia’s de-dollarisation campaign, officially noted, is in line with the country’s efforts to avoid the challenges posed by US government sanctions.

“Payments in US dollars go through US banks and a clearing system, which allows Washington to block any transactions they deem suspicious,” Punkin said. He added that the Russian government has not faced such issues with the euro or other fiat currencies and so far does not plan similar measures for any other national currencies.

Related:Bank of Russia Leaves $36B to Banks to Assess Bitcoin Holding Volume

Russia has been considering steps for several years to cut the share of US dollars in its $186 billion National Welfare Fund. Local officials are planning to dramatically increase their holdings of the Chinese yuan and invest in gold.

The latest comments from the Ministry of Foreign Affairs further strengthen Russia’s apparent interest in using crypto for international settlement. Last week, Russian President Vladimir Putin said it was “a little too early” to use cryptocurrencies to settle the oil trade. The President also acknowledged the potential of cryptocurrencies to transfer funds globally.

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