Russia is currently considering pegging the ruble to gold. This is what Kremlin spokesman Dmitry Peskov claims. President Vladimir Putin is considering this step. The consultations are ongoing.
Russian Security Council secretary and close Putin aide Nikolai Patrushev hopes Russia will gain more “sovereignty” over its financial system. Proposals to peg the ruble to gold and other commodities are being worked out. Russia produces around ten percent of the world’s gold annually and is a major producer of oil, gas, metals and grain.
However, the head of the Russian central bank, Elvira Nabiullina, contradicted speculation regarding a peg of gold to the ruble: This was “not discussed in any way”, she explained.
Rumors of a gold peg for the ruble – and thus a reintroduction of the gold standard in Russia – first surfaced in March. At that time, Russia’s central bank had declared that it would buy gold at a fixed price of 5,000 rubles by the end of June, which corresponds to the equivalent of 65 euros. Some observers saw this as a first attempt to peg the ruble to gold. After the ruble rose sharply, the central bank backed out and wanted to buy at negotiated prices.
A gold standard is understood to mean a specific currency system that was in use up to the First World War. It originally consisted of gold coins, later banknotes, which represented a claim to gold and could therefore be exchanged for gold. However, one also speaks of a gold standard when the entire money supply is covered with gold. Central banks are then obliged to guarantee the exchange of banknotes for gold at any time and at a fixed rate.
For the establishment of a gold standard, Russia’s central bank would have to sell gold at a fixed ruble rate in the future. Observers doubt that. Russia’s population is only too happy to exchange their rubles for gold. Of course, the prices are increasing every month.
The Central Bank of Russia’s fixed price for gold is something else. He should only guarantee to buy gold at a fixed rate. But she pays for the gold in rubles, which she can print herself. This contributes absolutely nothing to the stability of the currency. The fixed price envisaged in March had a different purpose: the sanctions are causing problems for the Russian gold mines. Therefore they can no longer sell gold to the west. Buyers in other regions require a price markdown. With the fixed price, the mine operators should be subsidized so that they do not reduce or even stop their production.