April 24, 2024
By Sharan Kaur Phillora
Several Russian companies are gearing up to employ digital financial assets (DFAs) in international settlements, potentially within this year, according to Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market. This development follows the recent legislative advancements allowing DFAs for cross-border transactions, aimed at mitigating the impact of global sanctions.
Here’s what we know:
Aksakov highlighted the strategic initiative during an announcement. “With the new law in place, enabling the use of digital financial assets in international payments, various organizations are preparing to deploy these mechanisms soon,” he explained. The expected integration of digital currencies could transform them into a significant alternative to traditional fiat currencies in global trade.
The shift towards digital assets is part of Russia’s broader strategy to circumvent the financial barriers imposed by Western sanctions, particularly those from the United States, which have targeted banks in allied countries like Turkey and China for facilitating transactions with Russian entities. These sanctions, according to Aksakov, aim to isolate Russia economically following its ongoing military operations in Ukraine.
Tuesday’s approval of draft legislation by Russian lawmakers marks a critical step forward. This legislation, still pending approval from Russia’s upper house and President Vladimir Putin, would allow Russian businesses to bypass the conventional banking system for international dealings. Such a change could significantly reduce the visibility and control external powers have over Russia’s financial interactions.
“The current banking system makes all transactions between Russian and foreign companies transparent, exposing them to our adversaries,” Aksakov stated. By adopting digital currencies, Russia aims to shield its trade activities from international scrutiny and sanctions.
The development has caught the attention of the international community, as it could lead to shifts in global trade practices and the role of digital currencies in economic exchanges. If successful, Russia’s move could set a precedent for how countries under economic sanctions seek alternative methods for international commerce.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
