Putin proposes extending term of Russia's Central Bank chiefBusiness & Economy March 22, 21:49
Mayor says investigation into London attack is underwayWorld March 22, 21:16
Ukrainian radicals urge Poroshenko to nationalize Russian banks’ subsidiariesBusiness & Economy March 22, 20:51
Peru is back on 2018 Dakar Rally track alongside with Bolivia, ArgentinaSport March 22, 20:08
Three dead, twenty injured in London attack — policeWorld March 22, 19:59
Stadium in Russia's Dagestan to be named after pole-vault queen IsinbayevaSport March 22, 19:19
Top pilots to fly Su-30SM jets over Moscow on Victory DayMilitary & Defense March 22, 18:53
Russian design bureau ready to integrate BrahMos missiles into frigates for Indian NavyMilitary & Defense March 22, 18:50
London police say they are treating Westminster incident as terrorismWorld March 22, 18:45
This content is available for viewing on PCs and tabletsGo to main page
Russian authorities want to make rouble the CIS’ regional reserve currency. Experts say it may be possible, but before that it would be necessary to solve certain problems including to lower the dollar-base approach in the economy and to develop the national financial sector. They say it unwise as yet to be speaking about rouble as the world’s reserve currency.
“The Russian currency may become a regional reserve currency, mostly within the CIS. This work continues. It is impossible to expect quick results here, simply impossible,” Head of the Presidential Administration Sergei Ivanov told audience of the Rossiya-1 television channel several days earlier.
He mentioned that trade within the Customs Union of Russia, Belarus and Kazakhstan is done in roubles partially. Besides, Russia is avoiding already additional risks of volatile basic currencies as it trades with China “on a rouble-yuan” basis thus keeping reliability of the Russian economy.
The Russian government expressed earlier the intention to make rouble a regional reserve currency.
Back in 2008, at the 12th St, Petersburg’s International Economic Forum, President Dmitry Medvedev voiced the objective for the Russian economy. “Turning Moscow into a mighty international financial centre and rouble into a leading regional currency are key components for competitiveness of this country’s financial system,” he said. Being domestically convertible, Russian rouble will claim the role of the kind. It may be used for payments in the rouble zone – first of all within the CIS.
Later on, the government started speaking about Russian rouble as an international reserve currency. Rouble has every chance to become the world’s new reserve currency, Prime Minister Dmitry Medvedev told the CIS International Investment Forum in Yalta in September of the current year. The world’s existing currency system based on domination of the US dollar has demonstrated lack of stability, he said.
Presently, Russian rouble along with currencies of the CIS countries, Central and Eastern Europe is considered to be a domestic currency, which means demand for it exists in the domestic market only. Though these currencies may be fully or partially convertible, they are not used in international operations.
Nowadays, Russian rouble is used also in territories of Abkhazia and South Ossetia. In February of 2012, Transdniestria’s President Yevgeny Shevchuk said his republic may introduce roubles as a parallel currency.
Over several years, continues the tendency to rouble use more actively in EurAsEC’s foreign trade operations – almost 50 percent of settlements inside the organisations are made in roubles. As for certain states, Russian rouble dominates in settlements between Belarus and Russia. Kazakhstan rates second here.
Thus, rouble as a currency for mutual settlements will be replacing dollar actively in the CIS, the Novye Izvestia reports Deputy Director of the CIS Countries Institute Vladimir Zharikhin as saying. The expert is sure this is a natural process since relations between the countries are improving.
Economists say, however, that at the current stage, the Russian currency has minimal chances to become the world’s reserve currency. The main obstacle here being high inflation, and besides, in the international market rouble is a typical raw-materials’ currency. Experts also stress a reserve currency status requires major economy. Russia’s economy is not big enough, though it is such inside the CIS, where rouble is becoming a payment currency.
The Gazeta.ru quoted MDM Bank’s COB Oleg Vyugin as saying that rouble is unlikely to become a reserve currency for a regional International Financial Centre, which Moscow aspires to become: “A reserve currency means big economy, and this currency is to serve the economy, which produces a major share of the GDP. It should be involved into major global flows of goods and services. The currency should be more or less stable for the economic factors, while rouble rate depends a lot on oil prices.”
“Rouble is most likely a regional currency, and it has a status to be fixed,” the KM.RU portal quoted COB of the National Currency Association Dmitry Piskulov as saying.
Oleg Abelev, Chief Analyst at Rikom-Trust, agrees Russian rouble may be considered to be a possible regional reserve currency, but that’s a long way to go.
He said the major factor affecting rouble’s development in the territories of EurAsEC and the Customs Union is that it is used as a payment currency, not as a reserve one. In order to obtain the aspired status, Abelev continued, Russia should first of all organise a liquid market of high-quality state securities; savings should be nominated in financial instruments in roubles, not in other foreign currencies. Secondly, the country should lower the inflation. The third factor is reducing deposits in foreign currencies.
The economist pointed to two global problems, which, when settled, may raise status of the Russian currency: lowering the dollar-dependence of the economy and development of the national financial sector. Abelev is sure that Russia’s lopsided economy is in the way to the reserve status. “Where almost 70 percent of the GDP are generated by one sector, it is impossible to say the currency may be a reserve one. Even participants cannot take it as reliable, which means it depends greatly on raw materials’ prices and on outflows and inflows of capital,” the analyst said.