Russia aims to replace US dollar reserves with digital assets in long term

As Russia continues pushing de-dollarization, the Ministry of Foreign Affairs (MFA Russia) is reportedly considering replacing the United States dollar with not only traditional fiat currencies but also digital currencies.

Aleksandr Pankin, deputy minister of Foreign Affairs of Russia, reiterated the countrys plans to reduce the U.S. dollar share in Russias international reserves and its usage in settlement with foreign partners in a Tuesdayinterview with local news agency Interfax.

The official said that MFA Russia isnt excluding the possibility of replacing the U.S. dollar with some digital assets alongside other currencies:

Its possible to replace the U.S. dollar with other currencies, both national and regional, as well as some digital assets in the long term.

Pankin added that such replacement would require significant efforts from the government, including rebuilding established cooperation models between jurisdictions and businesses, as well as creating new mechanisms for new settlement systems.

The official noted Russias de-dollarization campaign comes in line with the countrys efforts to avoid challenges posed by sanctions from the U.S. government.

Payments in U.S. dollars go through American banks and a clearing system, which allows Washington to block any transactions they deem suspicious, Pankin said. He added that the Russian government has not faced such issues with the euro or other fiat currencies and doesnt plan similar measures for any other national currencies so far.

Related: Bank of Russia to assess Bitcoin holdings volumes as $36B leave banks

For several years, Russia has been considering steps to cut the U.S. dollar share in its $186-billion national welfare fund. Local authorities areplanning to dramatically increase its holdings of Chinese yuan and invest in gold.

The latest remarks from the Ministry of Foreign Affairs further reinforce Russias apparent interest in using crypto for international settlement. Last week, Russian President Vladimir Putin said that it was a bit early to use cryptocurrencies for settling oil trades. The president also admitted cryptocurrencys potential for transferring funds globally.