An article by Mises Institute contributor Marcia Christoff-Kurapovna believes that now is the ideal time for Russia to introduce a gold-backed ruble.
Mises Institute contributor Marcia Christoff-Kurapovna believes that Russia may be in the process of planning for the introduction of a gold-based currency, and would be better off for it. “Though a far-fetched idea at first glance, many factors suggest that remonetization in gold may be a logical next step for Moscow,” Christoff-Kurapovna notes in an analytical article published Friday on the libertarian think tank’s website. The columnist notes that several factors may play into the decision, including Russia’s recent partial detachment from Western economic and financial structures, sanctions, the ruble’s devaluation and economic decline. She further explains that even before the sharpening of relations between Russia and the West, economists close to Vladimir Putin have for years “been expressing [Russia’s] unwillingness to remain at the monetary mercy of the US and its NATO allies,” among them Sergei Glazyev, economic advisor to the president, and political ally to Deputy Premier Dmitri Rogozin. Christoff-Kurapovna also points out that despite the ruble’s dramatic decline at the end of 2014, Russian economists rejected the idea of selling off gold reserves to prop up the currency, and on the contrary continued a heavily publicized purchase of gold. Christoff-Kurapovna attributes this to a keen awareness of the past lack of success among European countries including Britain, France, Italy and Spain in propping up their economies via the selling off of reserves. The expert argues that “while the Russian economy is structurally weak, enough of the country’s monetary fundamentals are sound, such that the timing of a move to gold, geopolitically and domestically, may be ideal.” The expert echoes commentary made by Russian economists and financiers, including recently by Central Bank Head Elvira Nabiullina, namely, that Russia’s debt to GDP ratio is low (equivalent to $478 billion in a $2 trillion economy), with most of its external debt in private hands, which has also declined by $100 billion, and with a budget deficit projected at less than 1 percent of GDP. More