The intensification of sanctions against Russia and Belarus has made the task of abandoning the dollar and the euro in mutual settlements and creating a single currency zone even more urgent. To achieve this goal, several obstacles in the integration of the economies of the two countries will still need to be removed. So far, this process has not been completed, but in the future the experience of Moscow and Minsk may become an illustrative guide for solving similar problems in the EAEU and Eurasia as a whole
Image source: sputnik-abkhazia.info
The slow but inevitable abandonment of the dollar in international trade is currently taking place all over the world. The fragmentation of the once unified global market inevitably causes the need, on the one hand, to increase settlements in national currencies, and on the other hand, to develop a single currency for the participants of individual interstate associations, which, in turn, is impossible without strengthening the integration of the economies of their member countries.
Large-scale changes in this sphere are taking place practically on all continents. For example, the introduction of a common currency is being discussed in South America, as well as within BRICS, which unites the world’s largest developing economies. Russia, as a member of this bloc, and Belarus, as a candidate to join it, are among the leaders in the process of transition to national currencies in mutual settlements. Therefore, their experience can be used by other countries in the future.
In September 2021, following the talks between Vladimir Putin and Alexander Lukashenko, plans for the future in this area were revealed. It’s about working on a common monetary policy, fx regulation and integration of national payment systems.
However, in December, President of Belarus noted that the level of cooperation between the countries is not yet high enough to talk about the introduction of a common currency. In May 2023, at a meeting with the head of the Central Bank of Russia Elvira Nabiullina, the Belarusian leader confirmed the earlier statement, specifying that it’s important to understand where the issuing centre will be located and who will manage it.
The Kremlin has a similar opinion. They also believe that the time has not yet come for the introduction of the “union ruble.”
“The level of our integration is still much lower than the level of integration in the European Union, simply incomparable. I’m not talking about a single currency now, god with it, it’s a matter, perhaps, of the future, if our respective economic services come to some kind of agreement on this. But we first need to synchronise our economic legislation: antimonopoly legislation, tax and customs legislation,” Putin said in December 2021.
Economist Alexander Yaroshevich points out that the introduction of a single currency is a kind of “roof” of the common house that the two countries are building.
But first, a “foundation” is needed – to create a common energy complex, and then a common industrial framework, “so that there would be a truly common economic space without any restrictions”. And only after that should we start putting the “roof” on.
For now, the more urgent task is to increase the volume of settlements between countries in national currencies. In this regard, according to Deputy Prime Minister Alexei Overchuk, the issues without which the convergence of the financial systems of the two countries is impossible are now being implemented.
We are talking about the harmonisation of monetary policy, inflation targeting, currency regulation and control. In particular, a programme is being implemented to ensure security and common measures of supervision and control in the financial market. The task of unifying requirements in the field of combating money laundering and terrorism sponsorship has already been successfully completed.
Work is also underway to create common deposit insurance rules. It is thanks to the union programme for the integration of national systems that the use of payment cards “Mir” and “Belkart” in the territory of both countries became possible.
According to Overchuk’s assessment, the share of national currencies in mutual settlements has now reached 85%.
“If you strive for the economies of the two countries to function as a single entity, you need to harmonise the financial systems. At the same time, we are not talking about the creation of a single currency, for the introduction of which conditions must mature. If at some stage of integration the economic operators of the two countries start to feel inconvenience from the need to use different currencies, then life itself will put everything in its place,” he said.
At the same time, as Doctor of Economics Valery Bainev noted: “Our national currencies cope well with maintaining and ensuring mutual trade turnover, liquidity of mutual commodity obligations and other types of interstate settlements.
It is likely that the dedollarisation of the global economy in the future will lead to the creation of a Eurasian currency zone, which all EAEU countries, as well as Uzbekistan, Tajikistan, Iran and countries of the Arab world will be able to join.
Last August, Russian Prime Minister Mikhail Mishustin noted at a meeting of the Eurasian Intergovernmental Council that settlement in national currencies within the association had reached 75 per cent.
As Overchuk noted back in 2021, the share of the ruble in trade with EAEU countries is gradually growing.
“For example, its specific weight in the structure of payments increased from 61.8% in 2013 to almost 72.5% in 2019. In the pandemic year 2020, it totalled 72.6 per cent. At the same time, the EAEU countries among themselves still prefer to use dollars and euros. However, the reality leads everyone to realise the importance of increasing mutual settlements in national currencies,” the Deputy Prime Minister said.
He also believes that to stimulate this process it is necessary to increase the liquidity of national currencies and ensure direct mutual quotations, to simplify access for residents of member states to the currency markets, as well as to improve technology and capabilities of national payment systems.
Dmitry Volvach, Deputy Minister of Economic Development of the Russian Federation, also notes the positive dynamics.
At the last St Petersburg International Economic Forum, he pointed out: “If in 2015 the share of national currencies in mutual settlements was just under 70%, last year we ended with a figure of 82%. According to operational data, in the first quarter of this year it exceeded 90%… The Eurasian Economic Union is the pioneer, the leader of this process in the transition to national currencies”.
As for the topic of a single EAEU means of payment, which is invariably raised from time to time, Volvach believes that it is too early to talk about it, as it will take at least five years to deepen settlements in national currencies.
Thus, it can be stated that the process of transition to a common currency of the Union State is not yet on the agenda, but the tighter the integration of both countries, the sooner it will be finalised.
For the time being, it is necessary to focus on solving urgent tasks that will make it possible to strengthen the economies of Russia and Belarus, making them independent from external interference.
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