How does Russia's "Ruble Settlement Order" turn into a financial war?

(Finance and Economics) How does Russia's "Ruble Settlement Order" turn into a financial war?

　　China News Agency, Beijing, April 1 (Liu Wenwen) Since the conflict between Russia and Ukraine, the United States and Europe have continued to impose sanctions on Russia, inflation in Russia has increased, and the exchange rate of the local currency, the ruble, has plummeted.

　　Things have turned around, however, since Russia announced that it would switch to paying in rubles for energy such as natural gas supplied to "unfriendly countries".

　　On March 31, local time, Russian President Vladimir Putin signed a decree stipulating that from April 1, companies from non-friendly countries should first open a ruble account in a Russian bank, and then pay for Russian natural gas purchased through this account.

The ruble settlement order has thus come into effect.

　　Affected by the above situation, the ruble stopped falling and turned upward, and counterattacked all the way, almost regaining all the lost ground since the Russian-Ukrainian war.

　　After Western countries froze Russia's foreign exchange reserves and cut off seven Russian banks from doing business with the SWIFT system, Russia's financial sovereignty was greatly affected.

As soon as the ruble settlement order is issued, some European countries that are highly dependent on Russia's natural gas resources will have to compromise and exchange hard currency for Russian rubles.

The ruble settlement order appears to have turned this energy war into a financial war.

　　Chen Fengying, a researcher at the Institute of World Economics at the China Institute of Contemporary International Relations, believes that Russia is rich in oil and gas resources and has huge reserves, and is a major energy supplier in Europe.

　　For some European countries that are highly dependent on Russian natural gas, Russia's binding of the ruble to natural gas can be said to have choked their "life".

In the face of Russia, which holds an important bargaining chip, they can only negotiate, and the European camp, which was originally aligned to the outside world, will also be divided.

　　She further analyzed that for Russia, this is also a "suicide" move.

Originally, Russia exported natural gas resources through pipelines, which was the cheapest way.

Today, if European countries do not buy it, Russia will have to process liquefied natural gas (LNG) and export it to India and other countries, and the processing and transportation costs will be greatly increased.

　　Chen Fengying said, but this "suicide" move also stabilized the ruble exchange rate.

In the face of the ruble settlement order, some countries had to compromise and hold the ruble, which caused the international demand for the ruble to rise, and the exchange rate stopped dropping.

　　In addition, the Central Bank of Russia recently announced that from March 28, the ruble will be linked to gold, and 1 gram of gold will be purchased at a fixed price of 5,000 rubles.

　　"It can be seen that when the ruble is linked to gold, the Russian market is further stabilized. If Russia subsequently requires all energy, grain and other exports to be settled in rubles, its negotiating capital will increase again, and it can be used in economic sanctions and counter-sanctions. Take the initiative." Chen Fengying said.

　　The exchange of rubles for natural gas, to some extent, broke through the economic blockade of the United States and the European Union against Russia.

On the one hand, it skips the difficulty of banning the SWIFT system in Russia and freezing Russia's foreign exchange reserves in Europe and the United States, and on the other hand, it makes the ruble appreciate and stabilize the market.

　　Although the settlement of the ruble makes this "lore" seem quite effective, most European countries do not agree with it, and the G7 has clearly expressed its rejection of Russia's plan.

On March 31, local time, German Chancellor Scholz reiterated that the country refused to use the ruble for settlement.

　　Scholz admitted that although the German government and companies will strive to reduce their dependence on imports of energy materials such as oil and coal by the end of this year, when it comes to natural gas, "we need a longer time."

　　Wang Xiaosong, a researcher at the National Institute of Development and Strategy of Renmin University of China, said in an interview with China News Agency that, in fact, exchanging rubles for natural gas is Russia's passive counterattack, and Russia is trying to achieve de-dollarization with its own resource advantages.

But obviously, treating the ruble as a foreign exchange reserve cannot be realized in the short term.

　　Chen Fengying judged that for Germany, which relies heavily on Russian energy, despite its current refusal attitude, certain compromises are bound to be made in the future.

"Today's battlefield has been extended to all directions, and every strategic victory may come to the negotiating table in the future. Now, Russia has the upper hand in terms of resources, and the United States cannot save the near thirst with far water."

　　The ruble settlement has turned an energy war into a financial war, and Russia appears to be targeting U.S. and European currency hegemony.

　　Dmitry Medvedev, vice chairman of the Russian Federation Security Council, said recently, "Abandoning the use of the dollar and the euro as the world's reserve currencies is no longer a distant fantasy. The era of regional currencies is coming, and the world's major powers need to agree on a new financial order."

　　Can the ruble come back to blood this time, can it really shake the currency status of the dollar and the euro?

　　Chen Fengying said: "Although it may be a certain trend to seek relative diversification under the existing monetary system, at present, the above is only a vision of Russia." (End)