Will Russia Return to Using the Gold Standard?

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Will Russia return to the gold standard?

Oliver Adey
4 March 2022

Moscow plans to scrap its 20 percent tax on private individuals buying precious metals. This is reported by the Russian state newspaper Rossiyskaya Gazeta citing Finance Minister Anon Siluanov. At the same time, the purchase of US dollars is to be made more difficult with a tax. Gold would thus become the last lifeline for the threatened private assets of Russian citizens. The push could pave the way for a return to some kind of gold standard at the national level, an almost historic event.

Introduced internationally as the Bretton Woods Agreement in 1944 and abolished by the USA in 1971, the gold standard has never been revived. His guiding principle: a state’s currency is linked to real existing gold reserves so that its value is guaranteed – as protection against inflation. With this step, Putin obviously wants to allay the fears of the population and the oligarchs of Russia of an economic crisis. And he can thus offer all citizens an escape route for their assets that are not based on the US dollar.

Escaping Sanctions: Gold vs. Crypto

There are several reasons why Moscow is relying on gold as a way out and not on a decentralized currency like Bitcoin: Moscow has been promoting the precious metal for many years in order to make itself more financially independent, especially from the US dollar, in which many Russians invest it accumulated wealth before the war. Putin can also control gold better than the financial flow of Bitcoin. For days, the USA has been demanding that the Russians be excluded from the crypto space as far as possible, their accounts in centralized exchanges such as Coinbase to freeze So far, most CEOs have refused.

Above all, Russia has bought up more gold than any other nation in recent years, with total reserves amounting to around 2,000 tons, the equivalent of 132 billion US dollars. In 2014, when Crimea was annexed, it was only around 42 billion. With this supply and all other foreign exchange, Russia could financially hold out for almost two years.

Source: Get to Text

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