Russia considers cryptocurrencies for international payments amid Western sanctions

Russia’s central bank has advised businesses to adopt ‘multiple choice solutions,’ including cryptocurrencies and other digital assets, to manage payments with foreign partners amidst Western sanctions related to Ukraine conflict. The sanctions have severely impacted Russia’s trade with non-sanctioning countries like China, India, the UAE, and Turkey. Key financial institutions, such as the Moscow Stock Exchange and Russia’s SWIFT alternative, have been targeted, exacerbating the challenges for the Russian economy.

Elvira Nabiullina, the central bank governor, highlighted at a financial conference in St Petersburg that the main economic hurdle is the disruption in payment systems. She noted that new financial technologies offer unprecedented opportunities, prompting the central bank to relax its stance on cryptocurrencies for international payments. Businesses have become innovative and discreet in finding solutions, often not disclosing their methods even to the authorities.

Nabiullina also discussed ongoing efforts to establish a new global payment system independent of Western institutions, noting that countries like Russia and its BRICS partners are feeling increasingly vulnerable relying on a single international payment framework. The proposed BRICS Bridge payments system aims to integrate the financial systems of member nations, though progress has been slow and complex.

Adding to the discussion, Andrei Kostin, head of Russia’s second-largest lender VTB, emphasised the sensitivity of international payment mechanisms. He suggested that such information should be classified as a state secret to prevent quick countermeasures from Western entities, implying that Western diplomats closely monitor Russian financial strategies.