Putin's Russia wants a new reserve currency

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Vladimir Putin says the days of the US Dollar as a global reserve currency are numbered.

During an appearance at a conference today, Russia’s President was fairly direct with his critiques of the dollar, while explicitly saying the world will look for alternative payment systems.

Here is the exact quote:

“We don’t have a goal to shift away from the dollar, the dollar is moving away from us….because the volatility of dollar transactions makes many economies around the world want to find alternative reserve currencies and create payment systems that are not dependent on the dollar. Its not just our problem, we see what is going on in the world.

Just look how the gold reserves of countries are dwindling, including those closely allied to the States. Dollar assets are decreasing, even among the largest holders of dollar assets. This is the result of imposing sanctions, including connected with the dollar. I think that this realization will come sooner or later and the world will look for alternative savings and transaction methods.”

There is a lot to unpack in these two paragraphs, but a few things caught my eye:

  • Putin used three phrases (alternative reserve currencies, payment systems, alternative savings and transaction methods) that sounds awfully familiar to the language that cryptocurrency enthusiasts use when describing Bitcoin. It wouldn’t surprise me if the Russian leader is not only aware of the digital currency, but also a fan.

  • These statements don’t appear to be theoretical in nature. It feels like Putin is saying there is a plan underway already to identify an alternative to the dollar and begin moving in that direction. If that is the case, it will be interesting to watch which countries choose to follow him and which countries choose to stand with the US.

  • Putin specifically called out the use of sanctions connected with the dollar. Although the US sees these sanctions as a tool in our toolbox, they are a form of censorship or seizure. Bitcoin and other decentralized digital currencies are built to avoid censorship or seizure so it would make sense that nation states are drawn to them in an attempt to reduce the US government’s power regarding economic sanctions.

  • The most interesting part of these comments is what Putin didn’t say — he never mentioned Bitcoin or other cryptocurrency. This was the most direct statement supporting the ideas behind Bitcoin I have seen from a world leader, but the digital currency went unmentioned.

  • It has previously been reported that Russia was a large supporter of Venezuela’s digital currency, the Petro. If true, it seems like Putin and Russia are already dabbling more in the cryptocurrency space than most developed countries.

The United States is the most dominant country in the world. Much of that dominance is based on controlling the global reserve currency, which could come under threat if Russia and other countries were to band together to solidify the use of an alternative reserve currency.

We are living in very interesting times. It is hard to understand all of the complexities at play here, but it is important we continue to watch the situation unfold. Some of this rhetoric and action should be a net positive (challenges people to identify how to improve the current system), but some of it can be dangerous too.

Bitcoin and other cryptocurrencies are maturing at a moment where global leaders are thinking critically about money. As they say in show business, timing is everything.

- Pomp

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