“Sovereignty” over financial system
Russia could peg ruble to gold price
4/29/2022, 4:29 p.m
Western sanctions have hit the ruble. To counteract this, Russia is considering pegging its currency to the price of gold. The country wants to ensure its economic security in this way.
According to Russia, it is examining linking the ruble exchange rate to the price of gold. This step will be discussed with President Vladimir Putin, said Presidential Office spokesman Dmitry Peskov, without giving details. The secretary of the Russian Security Council and a close confidant of Putin, Nikolai Patrushev, recently signaled that such a plan could give Russia more “sovereignty” over its financial system.
Patrushev said on Tuesday that proposals to peg the ruble to gold and other commodities were being worked out. However, a statement by the head of the Russian central bank caused confusion: Elvira Nabiullina said linking the ruble rate to the price of gold was “not discussed in any way”. She contradicted the official information from the Kremlin.
Russia produces about ten percent of the world’s gold annually and is a major producer of oil, gas, metals and grain. Russia’s central bank said in March it would buy gold at a fixed price of 5,000 rubles a gram until June 30. Some observers saw this as an attempt to peg the ruble to gold. But two weeks later, after the ruble rose sharply, the central bank backed down. She stated she would buy at negotiated prices.
“The most important prerequisite for ensuring Russia’s economic security is trust in the country’s internal potential,” Patrushev recently told the government newspaper Rossiyskaya Gazeta. When asked whether these ideas contradict economic theory, Patrushev said, “They do not contradict the conclusions of economics, they contradict the conclusions of Western economics textbooks.” Many currencies have historically been linked to gold or silver. But the link was severed when the US banned the exchange of dollars for gold in 1971.