The Bank of Russia's support for accelerating cryptocurrency payments for international settlements may involve the use of digital financial assets (DFA) rather than cryptocurrencies. This move is seen as a way to comply with the central bank's ban on crypto usage within Russia for such payments, while still enabling importers to settle transactions using crypto. The process involves buying crypto outside Russia and passing it on to the foreign supplier, with legislation currently in progress to update digital asset rules for cross-border payments. This initiative is connected to the metal tokenization concept, with Rosbank's owner, Vladimir Potanin, also controlling the metals firm Nornickel which started Atomyze, the first Russian firm to tokenize metal assets as a DFA last year. The Digital Ruble, Russia's central bank digital currency (CBDC), is a separate project, aimed at creating a path around sanctions and preventing the destabilization of the Russian economy.
what are the benefits of using cryptocurrency for international settlements
The benefits of using cryptocurrency for international settlements include the potential for faster and cheaper transactions, increased security, and the ability to bypass traditional financial intermediaries. Cryptocurrencies can offer improved cross-border payments through interoperability among national currencies, safety thanks to escrowed central bank reserves, and efficiency from low transaction costs. Central bank digital currencies (CBDCs) can also bring interoperability and efficiency among private networks for digital money and assets, providing a trusted infrastructure for digital record-keeping and asset transfer. However, the success of cryptocurrencies and CBDCs in the financial sphere requires the trust imparted by being backed by institutions like central banks. Despite the potential benefits, there are also risks and challenges associated with using cryptocurrencies for international settlements, such as regulatory issues, security concerns, and the need for international cooperation.