Moscow wants to allow crypto payments
Russia's international payments have been severely restricted since the start of the Ukraine war. To circumvent sanctions, Moscow now plans to allow transactions in cryptocurrencies. The experiment is set to begin soon.
Russia aims to introduce its first international payments in cryptocurrencies this year. "We are already discussing with ministries, agencies, and companies the conditions of the experiment and we expect the first such payments to take place by the end of this year," said Central Bank chief Elvira Nabiullina. It is expected that the parliament will pass a corresponding law as early as today. Tuesday.
The new law is set to allow Russian companies to use cryptocurrencies in international transactions. The new law is expected to come into force in the fall. Russia has had to endure significant delays in international payments with major trading partners. Many banks have become more cautious in dealing with their Russian business partners due to pressure from Western supervisory authorities. The reason for this is the sanctions imposed due to Russia's war against Ukraine.
Key interest rate recently raised
Cryptocurrencies are currently not allowed for payments within Russia. The new law aims to change this. The regulatory authority is ready to "show flexibility," said Nabiullina. The central bank sees the delays in payments as a major challenge for the Russian economy.
"The risks of secondary sanctions have increased," said Nabiullina. "They make payments for imports more difficult, affecting a wide range of goods." She noted that companies are finding solutions, but the difficulties are leading to longer supply chains and rising costs.
The Russian central bank recently raised its key interest rate due to rising inflation. The currency guardians raised the monetary policy key rate by two full points to 18 percent last Friday. This is the highest level since April 2022. "We do not rule out further increases," said Central Bank chief Elvira Nabiullina after the interest rate decision.
The rise in the key interest rate is aimed at combating inflation in Russia. Given the restrictions on international payments, the new law allowing cryptocurrency use in international transactions could potentially reduce these challenges and their associated costs.
