Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20
Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
From Trump’s TikTok Mess to US Tech Cold War against China - 7th Sep 20
The Federal Reserve vs. Judy Shelton And Gold - 7th Sep 20
Fed Dials Up Inflation Target…Own Gold - 7th Sep 20
Does Gold Still Have Plenty of Potential? - 7th Sep 20
CDC Shock Admission - THERE IS NO PANDEMIC! Over 90% of Deaths NOT From COVID19 - 7th Sep 20
Stock Market SPX to Gold/Silver Ratios Explored – What To Expect Next - 7th Sep 20
Is the Precious Metals Market really Overwhelmed and Chaotic - 7th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Russian Ruble the Next Reserve Currency?

Currencies / Russia Oct 08, 2012 - 02:25 AM GMT

By: Pravda

Currencies

Russian Prime Minister Dmitry Medvedev has recently surprised the international business community by saying that the Russian ruble could become an international reserve currency in the near future. The current situation in the global economy suggests such a development. Experts tried to figure out to which extent it was possible and what the move could bring to Russia.


Historically, the U.S. dollar became the main reserve currency for the entire postwar period (during 1945-1980). Only after the establishment of the European Monetary System in 1979, with the mechanism of joint circulation of European currencies on the foreign exchange market, a second key currency emerged - the German Mark. However, its share in international operations did not exceed 30 percent.

The introduction of the euro did not significantly change the balance of power between the key currencies. According to the Bank for International Settlements, the share of U.S. dollar in foreign exchange transactions has not changed in the last decade and made up about 85-90 percent, analysts of News Forex said. Today, the major currencies playing the role of reserve currencies, are the U.S. dollar, the euro, the Japanese yen, the British pound sterling and the Swiss franc. They are used to conduct and serve trade operations, ensure the global movement of capital, express prices in foreign trade transactions and in exchange rates and to ensure the mechanisms of currency interventions.

The Swiss franc is not a currency of foreign trade, but it is used as a reserve currency, because Swiss banks have mobilized considerable funds and provide reliable placement of capital. In turn, the pound sterling, despite Britain's declining role in the world markets, retains the reserve currency role, given the development of worldwide banking network of the country.

Ukraine's leading trader Yevgeny Antipenko said that a country that issues reserve currency has to meet certain requirements too. In particular, they include the regime of free convertibility of currencies (on current and capital transactions), the relative stability of the exchange rate, a favorable legal regime for using the currency for non-residents both inside the country and on international currency markets, a high level of development of the banking and insurance systems, financial market infrastructures and the country's leading positions in global economy and in the world trade.

The advantages of the United States, whose currency acts as the key reserve currency, are obvious. The orientation of the majority of countries on the US dollar allows the US to fully exercise international settlements with its own national currency at constant or even increased demand for the dollar as the world's most common means of payment and savings.

Russia, in fact, can get a lot of advantages, for example, an opportunity to get cheap and unlimited crediting of the national economy due to the accumulation of reserves in other countries in this currency; to purchase large quantities of goods and services on foreign markets to avoid the chronic deficit of the balance of payments.

Russia would become a world power, and its finances would be equated to gold. The ruble would thus be in demand abroad. This would make international settlement much simpler. In any case, if the Russian ruble becomes a reserve currency in the world, Russia will obtain the superpower's status with all pros and cons that go with it.

According to experts, if the US Federal Reserve confirms Russia's accession to the circle of the countries whose currencies are considered to be international reserve currencies, then one can give the following recommendations for different groups of Russian citizens:

1. Entrepreneurs (12%) having bank deposits should increase the share of deposits in Russian rubles, because the ruble rate will grow as soon as its new status is confirmed.

2. Tourists traveling for vacations abroad will be able to use ruble Visa and MasterCard cards.

3. International payments and transfers between Russia and the rest of the world will become much more simple.

4. For the majority of low-income Russians, the status of the international reserve currency will not play any significant role.

A reserve currency is a currency of a country, in which central banks of other countries form and preserve their official gold and currency reserves. This is a narrow interpretation of the essence of a reserve currency, which means that technically any national currency could become a reserve one in case foreign central banks formed their reserves in this currency. In reality, the recognition of a certain reserve currency requires a complex of economic prerequisites.

Valentin Vasspard

Bigness

Pravda.ru

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Pravda Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules