Bank Of Russia Deems Stablecoins Unsuitable For Settlement

The Central Bank of Russia does not have a positive opinion about stablecoins, as it called them unfit for payment purposes because they are highly risky. A top official of the finance ministry had previously asserted that they would throw their full support towards the development of stablecoins in Russia. The statement from the monetary authority was issued in response to this declaration.

Stablecoin opposition

The Russian Ministry of Finance may have a favorable stance where stablecoins are concerned, but the Central Bank of Russia (CBR) does not share the same optimism. According to the monetary authority, it does not consider them a good means for settlement, whether within the country or for international ones.

The Russian central bank asserted that the use and issuance of private stablecoins come with high risks because the holder does not win the underlying coins. The monetary authority said that this meant that redemption is not guaranteed at the nominal price of the asset, which implies that the price of a stablecoin is not actually stable.

The regulator issued this statement in response to what Ivan Chebeskov, the head of the Financial Policy Department of the Russian finance ministry had said recently. Chebeskov asserted that the Minfin would be in support of the development and launch of Russian stablecoins. The high-ranking official said that the goal of the ministry was to support Russian businesses in terms of digital assets regulation.

Chebeskov favors stablecoins

Speaking at the Russian Creative Week forum, Chebeskov said that if investors and companies require a new way of making payments and if the tool in question reduces costs and is able to get the job done better than other instruments, then they would support such measures, as long as risks can be limited.

Andrey Voronkov, the founder of Voronkov Ventures, had also noted that there were no stablecoins in Russia that were based on the blockchain and pegged to the Russian ruble. He said that they should develop such stablecoins because those that are linked to the US dollar strengthen the country’s fiat currency. Chebeskov did not give any hints on when they might issue a Russian stablecoin that would be pegged to the ruble.

Talk of stablecoins

There had been talks in June to develop a gold-backed stablecoin that could be used for international settlements and could help Russia in reducing the pressure associated with Western sanctions. Vladimir Gutenev, the chairman of the Industry and Trade Committee of the State Duma, had also said that Russia could permit the use of gold-backed stablecoins.

Meanwhile, the Russian central bank has been focusing on the development of its digital national fiat currency. Olga Skorobogatova, the First Deputy Governor of the CBR, had said that they were prepared to test the digital rubles for local and foreign transactions. The CBR has increased its efforts in terms of the development of the central bank digital currency (CBDC) in light of the trouble that the country is facing because of sanctions imposed after its Ukraine invasion.