Amid severe international sanctions following the outbreak of the war in Ukraine, Russia is increasingly turning to innovative financial tools to circumvent these restrictions. These initiatives, including the development of the digital ruble and a potential BRICS+ common currency, are designed to help Russia bypass sanctions and regain economic independence from Western financial systems. Moscow’s actions reveal its deepening financial isolation and growing determination to reshape global economic structures in its favor.

The Digital Ruble: A Russian Strategy to Bypass Sanctions

A key element of Russia’s plan to counter the effects of international sanctions is the development of the digital ruble, also known as the Central Bank Digital Currency (CBDC). Currently undergoing development and testing, the digital ruble is positioned as a solution to facilitate transactions without relying on traditional global financial networks, many of which have excluded Russia due to sanctions.

Artem Kiryanov, the deputy chair of the Russian Duma’s economic policy committee, recently outlined the two primary uses for the digital ruble. First, the digital ruble aims to enhance public spending transparency. But more importantly, it is intended to help Russian businesses conduct international transactions, especially those affected by sanctions.

“The digital ruble will primarily be used by entrepreneurs engaged in international economic activities. This will help them conduct transactions amidst sanctions, making their lives easier.”

The Russian government is increasingly locked out of global banking systems, especially the SWIFT network, due to sanctions. The digital ruble would provide a way for Russia to continue international trade by using its own currency rather than relying on Western systems. By introducing this digital currency, Russia could evade key financial blockades and offer a stable alternative for cross-border transactions.

The Digital Ruble as a Sanction-Evasion Tool

The digital ruble is not just a technological innovation; it is a tool to help Russia mitigate the effects of sanctions imposed by the West. With restrictions making it difficult for Russian businesses to access the international financial system, the digital ruble offers an alternative that bypasses Western-controlled networks.

This is particularly important in light of Russia’s exclusion from SWIFT and other global payment systems. The digital ruble could serve as a financial lifeline for Russian entrepreneurs involved in international trade, allowing them to process payments without interference from sanctions. This also allows the Russian government to regain some control over its economic activities, even as the global financial system isolates it.

The launch of the digital ruble has become a priority for Russia, with President Vladimir Putin suggesting that the currency could be fully implemented nationwide within a year. By ensuring the digital ruble’s integration into international markets, Russia would not only shield itself from Western sanctions but could also extend its financial reach beyond traditional borders.

The BRICS+ Currency: A Strategic Push to Challenge Dollar Dominance

While the digital ruble is a key part of Russia’s sanctions evasion strategy, the country is also working on a broader plan involving the BRICS+ nations. Russia, alongside China, India, Brazil, and South Africa, is exploring the possibility of creating a common currency to rival the US dollar. This currency, known as “The Unit,” would be used for transactions within the BRICS+ group, providing an alternative to the dollar’s dominance in global trade.

In September, President Putin confirmed that the BRICS+ countries had begun discussions to create a shared payment system. The ultimate goal is to reduce their reliance on the US dollar, which Russia and other members of the group have criticized for its overwhelming influence over international finance. If implemented, “The Unit” would allow these countries to circumvent the financial systems controlled by the West and reduce their exposure to dollar-based sanctions.

Though the introduction of “The Unit” is still in the early stages, the BRICS+ group is committed to moving away from the US dollar in favor of a shared, non-dollar currency. This effort is part of a broader de-dollarization movement, with Russia at the forefront, pushing for a financial system less reliant on the US.

De-dollarization: Russia’s Push to Free Itself from Dollar Dependency

The BRICS+ currency initiative is just one part of Russia’s broader push for de-dollarization, a process aimed at reducing global reliance on the US dollar. This effort has gained significant traction within the BRICS+ group, with countries like Russia and China leading the charge. De-dollarization is seen as a way to mitigate the economic power that the US holds over global financial systems, particularly in times of conflict or political disagreement.

For Russia, de-dollarization has become a critical priority, especially as its economy faces mounting pressures from sanctions. The country’s financial isolation has made it clear that relying on the US dollar is no longer feasible. By promoting a shared currency within the BRICS+ group and developing alternatives like the digital ruble, Russia hopes to regain control over its economic destiny and reduce the risk of further sanctions.

The long-term goal of these initiatives is to create a more diversified and self-sufficient global financial system. While these efforts may take years to fully materialize, they represent a significant shift in how Russia approaches global trade and finance, as the country seeks to evade the economic restrictions that have placed its economy under severe strain.

Conclusion: Russia’s Strategic Financial Maneuvers to Evade Sanctions

In conclusion, Russia’s financial strategy is driven by the need to bypass international sanctions and regain economic autonomy. The digital ruble and the potential BRICS+ common currency are central to this strategy, offering Russia tools to circumvent Western financial systems and reduce reliance on the US dollar. While the digital ruble is already being tested, the BRICS+ currency remains a long-term project, with hopes for implementation by 2030. These initiatives are vital for Russia’s economic survival and reflect a broader effort to reshape the global financial system in the face of ongoing geopolitical challenges.

Related Links

• How Russia Plans to Use Digital Currency to Evade Sanctions
• The Rise of BRICS+ and the Future of the Global Economy
• Understanding Sanctions Evasion: A Global Perspective
• Russia’s Push for Financial Independence: The Digital Ruble Explained

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Source (in French): Cryptoast