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Russian government is working on a draft law to cut dollar use

Russian government prepares a draft law aimed at reducing the economic dependence on the U.S. currency, as reported by The Bell outlet with reference to the sources familiar with the matter.

“De-dollarization” plan is to be approved within one or two weeks by the Russian Prime Minister Dmitry Medvedev. The draft law is based on the initiative voiced back in July by the head of state-owned VTB Bank Andrey Kostin.

Last month, Andrey Kostin, head of state-owned VTB Bank, announced his own plan for “de-dollarization.” It would take about five years and include increased usage of local currencies in international trade, re-registering major companies in Russia and using local financial infrastructure for Eurobond issues, he said.

Kostin’s plan presupposes the implementation of measures for stimulating the increased usage of Russian rubles in international settlements and trade. Vladimir Putin has allegedly approved the initiative, as claimed by Kostin himself.

Russian authorities have “no plans to give up dollar settlements, ban the circulation of the dollar or impose any other restrictions”, however, as the official statement from the cabinet’s press service reads. The process of “de-dollarization” will supposedly take about five years.

According to the sources mentioned above, a particular emphasis will be placed on providing more room for international settlements in rubles and relaxing foreign exchange control and regulation.

Russia has for years called for shifting more of its transactions with China and the European Union, its main trading partners, into yuan and euros, while operations with its former Soviet neighbors could be done in rubles. But progress has been slow.

Being discussed by the experts from Bank of Russia, VTB and other major Russian banks, the issue basically revolves around the means of creating a convenient and business-friendly infrastructure that would allow for making settlements in any currencies.

Back in June, a number of Russian institutions, including the Corporate Treasurers Association (CTA) embarked on testing the blockchain system prototypes designed for financial transaction reporting and devised as a possible alternative to the SWIFT system.

It is also worth noting, that German Foreign Minister Heiko Maas has also been stressing the need to create an interbank financial information transmission system that would be independent from the U.S.-controlled SWIFT. According to Maas, Europe’s growing rejection of SWIFT is prompted by the transformational changes in the global financial system, the general move for strengthening the EU autonomy, Europe’s willingness to stick with Iran nuclear deal and protect its businesses from potential U.S. sanctions.