Over the weekend, Russian President Vladimir Putin raised the proposal of building a new blockchain-based global payments system for international settlements. Putin said that the new system shall involve a digital currency for transactions and must be independent of banks and third-party interferences.
The latest announcement from the Russian President came while speaking at a Sberbank-organized artificial intelligence conference. Mr. Putin said that the existing global payments and financial transactions between countries are in jeopardy.
This has been mainly due to the rising tensions between Russia and the West. Also, since the Ukraine invasion, the West has cut off Russia from the SWIFT banking systems. The sanctions have also prohibited Russia from accessing billions of dollars of its own reserves placed in global banks. Speaking on the development, President Putin said:
We all know very well that under today’s illegitimate restrictions, one of the lines of attack is through settlements. And our financial institutions know this better than anyone because they are exposed to these practices.
Based on the technologies of digital currencies and distributed ledgers, it is possible to create a new system for international payments, and much more convenient, but at the same time completely safe for participants and completely independent of banks and interference from third countries.
Vladimir Putin finds flaws in the current system
During his speech at the conference, President Putin also spotted the flaws in the current financial system. He noted that the existing international payment method is pretty expensive. Additionally, Mr. Putin blamed the financial groups controlling international settlements for its high costs.
Putin called the Western sanctions on Russia illegitimate. He also said that the international settlements have become the new weapon for the west and a point of attack. “And our financial institutions know this better than anyone because they are exposed to these practices,” he added.
Earlier this year in March, the Bank of Internal Settlements (BIS) suspended Russia from using its services. Since then Russia has been making several pro-crypto moves showing the likelihood of crypto adoption. It has been also working on ways to legalize crypto use in the country.
This is quite an early stage development and we are not sure what plans Russia exactly holds. However, banks across the globe have started adopting the XRP for facilitating cross-border payments. Considering Ripple is based out of San Francisco, USA, it is not clear whether Russia will accept this payment system.