The Russian ruble has depreciated 16.48% against the US dollar over the past month as energy and commodity prices fell over the past few weeks. The Central Bank of Russia announced two weeks ago that it was moving further away from dependence on the US dollar by buying the Chinese yuan in foreign exchange markets. Around the same time, on December 21, 2022, Yaroslav Lissovolik, CEO of Sberbank and a member of the Russian International Relations Council (RIAC), published an opinion piece exploring the path to a new BRICS reserve currency.
The Central Bank of Russia is trying to reduce dependence on the US dollar by buying the Chinese Yuan
In late July, Bitcoin.com News reported on the BRICS countries’ plan to create a new reserve currency after Russian President Vladimir Putin announced the plan at the BRICS summit in June. Although the topic was relevant at the time, people stopped discussing the BRICS reserve currency for a while. A few months later, in October 2022, Robert Kiyosaki, author of the best-selling book Rich Dad Poor Dad, discussed the topic and noted that the US dollar was “toast”. Energy prices and commodity prices have fallen over the past 30 days, but some economists expect oil prices to rise above $200 a barrel at some point in 2023.
Although energy and commodity prices fell, the Russian ruble also fell against the dollar. Statistics show that the ruble has depreciated 16.48% against the US dollar during the 30-day period, but the five-day period shows that the ruble is up 1.72%. Year-to-date statistics show that the Russian currency has grown by 5.37% over the past 12 months. Meanwhile, at the end of December 2022, Reuters reported that Russia will buy the Chinese yuan in the foreign exchange market in 2023. Reporter Elena Fabrichnaya reported that Moscow’s move, citing two sources, “opens a new front in accelerating de-dollarization.” It was designed to reduce its dependence on Western finance.
A Sberbank analyst discusses the possibility of a BRICS reserve currency complementing national currencies
The previous day, on December 21, 2022, Yaroslav Lissovolik, a member of the Russian International Relations Council (RIAC) and head of Sberbank’s analytical department, published a blog post titled “Exploring the Ways” discussing the proposed BRICS reserve. Currency. After Russian President Putin’s speech at the BRICS summit, Lissovolik said that “the reserve currency of BRICS has become particularly important in recent months.” The analyst noted in detail that recently there have been discussions about legislative acts and “the advisability of creating a new reserve currency”.
Lissovolik referred to the latest discussion on the BRICS reserve currency at the Eighth BRICS Parliamentary Forum. At the event, the Chairman of the Federation Assembly, Valentina Matvienko, suggested to the BRICS legislators to start moving forward on concrete measures that strengthen the economies of the countries. Matvienko mentioned specific initiatives, including the development of a new international reserve currency and better settlement procedures within the BRICS countries. Lissovolik’s blog post also compared the idea of a new BRICS reserve currency to the 2018 Valday Club R5 currency concept, the name of which stands for the letter “R” for five currencies: real, ruble, rupee, renminbi and rand.
Lissovolik detailed that the new BRICS reserve currency would not be created to replace the national reserve currencies used by each country, but to “complement these national currencies.” A Sberbank analyst said the new reserve currency “could have a transformative effect on the international financial system” because he believes there is a “significant shortage of reserve currencies” in the global economy.
“Importantly, the application of the new reserve currency in the world economy is quite large given the great potential for de-dollarization,” Lissovolik’s blog post concludes. “The new BRICS reserve currency could be aligned with the stronger role of BRICS national currencies to capture a greater share of the total share of foreign exchange transactions in the world economy.”
What do you think of the Sberbank analyst’s editorial about the new BRICS reserve currency? Share your thoughts on a potential new BRICS reserve currency in the comments section below.
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