Russia has announced plans to create two state-owned cryptocurrency exchanges aimed at making digital payments for international trade transactions.
US sanctions have led Russia to seek alternative payment methods to keep its economy stable. The two cryptocurrency exchanges will operate in two different cities, one in Moscow and the other in St. Petersburg.
Additionally, BRICS member Russia is also planning to launch a stablecoin pegged to the Chinese yuan. The bold plan from Russia, a leading BRICS member, is to peg the Chinese yuan to the new cryptocurrency-based stablecoin at a 1:1 rate.
This makes its price remain stable and it is relatively safe to start trading without worrying about price fluctuations.
The stable BRICS currency pegged to the Chinese yuan will help Russia circumvent US sanctions and end its dependence on the dollar. Therefore, the Russian ruble and the Chinese yuan will benefit more when bilateral trade is settled through the new payment mechanism.
The dollar will play no role in the payment system, so that all transactions are fully settled with local currencies. China is aiming to make the Chinese yuan the dominant currency, and Russia is helping it achieve that goal.
Also, the first step was de-dollarization and the second will be the new BRICS stable currency pegged to the Chinese Yuan.
De-dollarization and the gold standard
The US dollar could face serious challenges in the coming years as the process of de-dollarization spreads across the global financial system.
In addition, the BRICS grouping alliance is pushing the Chinese yuan to the forefront of all cross-border transactions. Many developing countries have already begun to settle a part of their trade in the Chinese yuan rather than the dollar.
Inspired by the BRICS de-dollarization agenda, Zimbabwe launched a new gold-backed currency, the ZIG, early this year to address a shortage of dollar foreign reserves. The gold-backed currency was launched in April 2024 to reduce the circulation of the US dollar in the country.
Amazingly, ZIG is gaining ground across Zimbabwe and 40% of payments are initiated in the new currency by citizens. While 40% of payments are settled in new currency the government settles 80% of transactions on the gold-backed ZIG.
The BRICS alliance aims to reduce the influence of the dollar as a reserve currency. There is a growing trend for developing countries to use local currencies to strengthen their economies. ZIG is used in 40% of all transactions leaving the US dollar in 60% of trade settlements in Zimbabwe.
The government wants the gold-backed ZIG to be the sole currency by 2026 in order to achieve the de-dollarization of the economy.
The move will help Zimbabwe stabilize its economy and rely on its own currency rather than dollar-denominated foreign reserves. The growing use of ZIG shows that it could be the main currency in 2026.
Currency wars could intensify in the coming years as the BRICS succeed in persuading developing countries to abandon the reserve currency.
Former President Donald Trump has vowed that other countries will not abandon the dollar when he is re-elected to office after November’s election.
“I would not allow countries to retreat from the dollar because when we lose that standard, that will be like losing a war through a monetary revolution. This will be a blow to our country and its international standing. That is clear to us,” he said referring to the BRICS.
