Iran & Russia Plans To Create A Stablecoin Backed By Gold
Iran and Russia are working together to find a new medium for international settlements that may function in a manner that is circumventive of sanctions imposed by the West.
A new cryptocurrency that will be backed by gold is currently being developed through a collaborative effort between the Central Bank of Iran and the government of Russia.
Iran and Russia have been working together to create a completely new digital currency that will be known as the “Token of the Persian Gulf region.” This project has been jointly funded by Russia. The cryptocurrency that is backed by gold would be used as a method of payment in business deals that took place on a global scale. The suggested gold-backed cryptocurrency would be usable in the special economic zone of Astrakhan, which is the first location in Russia where Iranian cargo exports have been authorized.
Purpose of the collaboration
Numerous economic sanctions have been imposed on Russia as a result of the ongoing war with Ukraine. Additionally, Russia is not permitted to use the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system, which facilitates the execution of financial transactions between banks around the world.
Both Russia and Iran’s decision to work together on the creation of a cryptocurrency backed by gold could be the response they come up with to bypass the sanctions imposed by the West.
Russia and Iran are two nations that forbade their citizens in the past from making payments with cryptocurrencies and stablecoins. However, both countries have both been working together to use cryptocurrency in international trade and have been considering the legalization of international cryptocurrency payments.
History of the Petrodollar
After the collapse of the gold standard, President Nixon assumed control of the dollar, which resulted in the establishment of the petrodollar. Because the United States government was unable to keep up with the pace of printing money to pay off their debts, he had no alternative but to establish a new monetary system.
The creation of a new currency, known as the petrodollar, has been feasible as a result of the fact that oil is priced in US dollars. As more oil is produced and there is a greater demand for oil all over the world, the value of this resource will increase. On the other hand, if there is not enough oil, the price will plummet.
The United States exerts a strong influence over the price of oil. They determine the quantity that they need to purchase or sell. If they have a requirement for more oil, then they will purchase more oil; if they do not, then they will reduce the amount of oil that they sell. As long as there is a demand for oil in the United States, the price of oil will remain high.
Is the petrodollar fading away?
The usage of the petrodollar as the main currency for international oil transactions has been a significant part of the world economy for a long period of time. However, there have been indications in recent years that its supremacy may be waning.
This tendency has been influenced by a number of variables, including the rising significance of other currencies in global trade, the expanding use of alternative energy sources, and geopolitical concerns. Additionally, some nations have been attempting to develop fresh commercial ties and financial frameworks outside of the US dollar.
Currently, the petrodollar remains a powerful factor in the world economy and is likely to do so for some time to come. But in the long run, it’s probable that its impact will keep diminishing. This pattern has become more prevalent over the past several years as nations have been making efforts to diversify their monetary structures and lessen their reliance on the United States dollar.
The adoption of gold-backed stablecoins has the potential to pose a threat to the United States dollar’s position as the preeminent currency in the worldwide monetary system, which has led some industry professionals to speculate that this might represent a paradigm change in the world economy. However, it is essential to keep in mind that these plans are just in the preliminary phases of creation, and it is difficult to predict how effective they will be once they are put into action.
Could there be a new monetary system?
In order to promote economic flexibility, governments all over the world switched from the gold standard to fiat money in the 20th century. However, the only thing that guarantees the value of fiat currency is the faith of the government and its ability to collect taxes. The fiat currency does not possess an inherent worth in and of itself, therefore it is more susceptible to inflation due to the fact that more of it can be produced whenever necessary.
A stablecoin backed by gold will make it possible for Russia and Iran to peg their currencies to the international gold rate rather than a fiat currency. Russia is working toward making its currency independent of comparisons to the dollar by tying the value of the ruble to gold. By imposing a requirement on other nations that they must purchase their desired key exports with the ruble.
Oil and natural gas are the two principal commodities that Russia exports internationally. Russia hopes to pave the way for an alternative global financial path and boost the quantity of gold it possesses.
The resistance to the dominance of the US dollar may have started at this point. It is a well-established fact that the Russians desire to live in a world where other nations pay their obligations to them in gold. As a result of the United States’ use of the dollar as a weapon in the form of sanctions, the Middle East is considering isolating the American currency as well.
It is expected that Russia will allow the use of cryptocurrencies for foreign trade sometime this year. Is it possible that we have entered a new age for the new petrocurrency, which will be a driving force in the process of displacing the dollar as the world reserve currency accepted around the world? Only time will tell.