“Golden ruble 3.0” –How Russia can change the infrastructure of foreign trade — Sergey Glazyev and Dmitry Mityaev

http://mikenormaneconomics.blogspot.com/2023/01/golden-ruble-30-how-russia-can-…

Created

Sun, 22/01/2023 - 08:05

Updated

Sun, 22/01/2023 - 08:05

Trade is settled either by barter, including using commodities, mostly precious metals historically, or a "safe currency" that countries are willing to hold. The USD, GBP, and EUR are considered safe currencies. Thus, an issue arises with "de-dollarization," which includes all currencies that Western powers control the use of. These currencies are considered "safe," that is, are not only default free but also relatively stable, but being subject to Western control, they put users at a disadvantage in that they can be "weaponized." So the question arises, how to settle trade without using currency or settlement systems of "unfriendly" states.

One solution is two-party trade settled either by exchange of commodities that the respective partners to the trade desire, or by using their own currencies. Both alternatives are coming to be used now.

However, a more efficient system would be to replace unwanted currencies even through they are considered "safe" for states friendly to their issuers, at least as long as relations remain friendly, with another currency that the respective painters to trade would desire to save for use in future trade with another party. Sergey Glayev has been working on a commodity-linked solution, which is presented here.

This is not only a plan but also a review of the relevant history. This particular proposal is not as important as the perceived need to replace the dollar system that is no dominant and that the US has "weaponized" using both primary and secondary sanctions as means of prosecuting economic warfare. Is the term "warfare" too strong? It seems not, since the West, and chiefly the US, aimed at bringing down the Russian government using sanctions and replacing it with a Yeltsin-like government that would be effectively a US puppet.

Of course, criticism of a new gold standard — Glazyev advocates fixing oil price to a specific amount of gold instead if letting it float — would be that metal standards have resulted in mercantilism historically, with all that implies for global economics, geopolitics, and the world system.

MR Online
“Golden ruble 3.0” – How Russia can change the infrastructure of foreign trade
Sergey Glazyev, Academician of the Russian Academy of Sciences and Dmitry Mityaev, Executive Secretary of the Scientific and Technical Council under the Chairman of the EEC Board

Originally published at Russia Posts English, December 26, 2022