Deep Discussion That Wasn't: Meeting on Economic Issues

The development of digital technologies in the financial sector was discussed.

What we get amounts to a tease for those of us closely following the dedollarization efforts as we get Putin’s introductory remarks with the bulk of the discussion happening without the cameras or public transcription. Grumble!! Let’s read what he said and then go from there:

Vladimir Putin: Dear colleagues, good afternoon! Hello!

Today I propose to discuss issues related to the development of digital technologies in the financial sector, and more specifically - with the introduction and use of digital currencies and other assets.

This is indeed a very dynamic and promising area of the modern economy, which is becoming increasingly popular among businesses, investors, and citizens almost all over the world. Such technologies are already beginning to change the usual patterns in trade, banking, services, and international payments.

It is important for us in Russia not to miss the moment, to set up the legal framework and regulation in a timely manner, to develop infrastructure, and to create conditions for the circulation of digital assets, both within the country and in relations with foreign partners.

We have already made serious progress in this area, and I hope that our colleagues will report on the current results and future plans today. At the same time, I suggest focusing on issues that require special attention and additional solutions.

I will start with a pilot project that was launched by the Central Bank in August last year. We are talking about a test, trial use of the digital ruble. In fact, this is another form of our national currency. Its special feature is that citizens and businesses can use the digital ruble regardless of which bank they have an account with.

The project involves 12 banks, 600 individuals and 22 retail and service enterprises from 11 cities. As of the first of July, more than 27 thousand transfers and more than seven thousand payments for goods and services have already been made in this system. In short, the digital ruble platform in the framework of the "pilot" has shown its efficiency and functionality.

Now we need to take the next step, namely, to move to a broader, full-scale implementation of the digital ruble in the economy, in business activities and in the field of finance. I hope that today we will discuss this topic in detail.

And a separate issue concerns the so-called cryptocurrencies. They are not monetary units in the usual sense but are increasingly used in the world as a means of payment in international settlements.

In turn, the production, or so-called mining, of digital currencies can be carried out virtually anywhere in the world. But this requires a lot of electricity.

The Ministry of Energy estimates that Russia spends 16 billion kilowatt-hours annually for this purpose, or almost one and a half percent of the total electricity consumption in the country. And the number continues to grow.

The factors of such growth are generally clear. These are relatively low electricity prices in our country, the mobility of equipment for mining cryptocurrencies, and so on.

But what should attract our attention here and what is alarming here? An uncontrolled increase in electricity consumption for mining cryptocurrencies may lead to a power shortage in certain regions. And this is already being noted in the Irkutsk Region, Buryatia, and the Trans-Baikal Territory.

The issue is actually acute and fraught with serious consequences for enterprises, housing and utilities systems, and specific cities and towns. Colleagues from the regions speak directly about their concerns in this regard.

I agree with them. Obviously, if there is no free capacity, if it is "selected" by the so-called mining farms, then new enterprises, residential areas, and social facilities will face supply disruptions, power shortages, and promising investment and infrastructure projects will be put on pause.

Here we need to make the right timely decisions, including systemic ones, at the level of federal law.

I have already given instructions to regulate the mining of digital currencies in Russia, including issues of taxation of this activity and tariff decisions. Today, let's discuss what has been done and how this work should be built in the future.

Let's move on to discussing the suggested topics. [My Emphasis]

Security around all facets of the coming new financial structure and its systems is profound and as tight as Russia’s military opsec—extremely little is allowed to be said on the matter, with most of that coming from the Ministry of Foreign Affairs, although the Ministry of Finance occasionally provides a tid-bit such as the fact that trials of the system have happened, continue and are positive. Enough is known to say the system will be based on Central Bank Digital Currencies that differ from everyday digital currency such as the digital ruble. They will be used to settle international trade that will be routed through a clearing house bank using newly created structural forms of transmittal independent of all things Western.

One can infer from what Putin did say above that the mining of digital crypto currency will likely be deemed a threat to national security because of its vast energy use. So, part of the discussion likely involved proposals for federal legislation for the strict regulation or outright banning of such mining. It’s also likely that further expansion of the digital ruble was discussed, although the absence of Central Bank head Nabiullina from the meeting seemed odd to me.

The BRICS Summit in Kazan will occur in three months which is when the announcement of the new system is expected to be made. I expect questions related to that event to increase in frequency going forward. An interesting analytical essay has appeared related to the recent revelations of Saudi Arabia’s preemptive talk related to theft of financial properties that readers will want to add to their list, “Saudi Arabia Could Break the West’s Financial Architecture,” by Murad Sadygzade, President of the Middle East Studies' Center in Moscow. It opens thusly:

Private property has always been regarded as something sacred for humanity. Today, however, this sanctity and inviolability of private property are under threat. In the modern world, where economic and political instability are becoming increasingly common, the legal systems and international agreements designed to protect property rights are facing new challenges. Asset confiscation, economic sanctions, and political pressure threaten the traditional notions of property inviolability, forcing people to reassess their beliefs and seek new ways to safeguard their interests. [My Emphasis]

The discussion of the “universal value” emphasized above in Hudson’s Collapse of Antiquity is very revealing and its gross violation by the Outlaw US Empire hasn’t caused nearly the uproar it ought to have globally, but particularly in the West where it’s akin to an Eleventh Commandment. Further speculation on fomenting a major war so force majeure can be invoked by deeply indebted nations, particularly the Outlaw US Empire. However, the term refers to an unanticipated and unforeseeable force, which in this case isn’t true as it’s very clear that escalation current conflicts are both being anticipated and are thus foreseeable. Although it’s not for me to decide, I don’t see such an argument having any logical legs to stand on. Putin and others have prominently declared the Outlaw US Empire’s own actions have undermined its Dollar Hegemony and has further made it completely untrustworthy, the primary fact prompting the Saudi’s behavior. If Trump/Vance win in November, they’ll find it close to impossible to accomplish point #13 on the Republican National Committee’s Platform as well as several others as Dollar Hegemony is effectively dead as is the Petro Dollar, both of which have enabled the Empire’s fantastical indebtedness.

The Global Majority’s aim is to eliminate the Rentier components of the global system that go beyond currency manipulation, which is what’s meant when the words fair and just are attached to economic relations. Establishing the structures for a new international financial system and other related institutions is a complicated yet necessary process to free the world from hegemony and institute balance and harmony that’s long been absent. The fix won’t alter things immediately but will begin what ought to be an irreversible process.

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