Glazyev Weighs in on BRICS ‘Common Currency’ Discussion, Russian Monetary Policy

July 23, 2023, 2022 (EIRNS)—Renowned Russian economist Sergey Glazyev, (in Russian) Minister of Integration and Macroeconomics at the Eurasian Economic Commission of the EAEU, used two interviews on Tsargrad-TV, on July 6 and July 17, to discuss prospects for the Aug. 22-24 BRICS summit in South Africa, and for Russia’s presidency of the BRICS in 2024. At the end of the July 17 interview, Glazyev said that the creation of a “sanction-proof” BRICS digital unit of account is under discussion, based not only on the BRICS national currencies, but also a basket of commodities. He expressed his hope that the South Africa BRICS summit will form a working group to proceed with the design and establishment of such a new system, adding that that’s what “we” are working for. He argued that a payments system outside of SWIFT, i.e., without using the trans-Atlantic banking system, can be set up through a network of state-run digital currencies—not to be confused with cryptocurrencies backed only by private speculators.

Turning to the Russian situation, Glazyev argued, as he frequently has in the past, that with a digital ruble it would be possible to track transactions in the blockchain and prevent non-intended use of funds. This would remove what he said is one of the big obstacles cited against issuance of state or state-backed preferential investment credits: their non-intended use, i.e., diversion into speculative markets. He underscored that Russia is shooting itself in the foot by low spending on R&D: currently it’s at less than 1% of GDP, but should be at 4 or 5%.

In the July 17 interview, he also sharply criticized the policies of the Central Bank of Russia under Elvira Nabiullina, and her expected announcement of a sharp rise in interest rates—which she in fact made on July 21. A summary of Glazyev’s remarks published on Russia’s Tsargrad.TV continues (in machine translation):

“The expert recalled that after each inflationary surge, the Central Bank usually raises the interest rate and thereby stifles lending and investment. The rate hike has just been announced—it is expected that this will happen at the Central Bank’s board of directors on July 21.... But at the same time, the economy is degrading, since there is no investment, the technological gap is growing, competitiveness is decreasing, and conditions are being created for a new devaluation.... ‘This is what is called inflation targeting.... But, from my point of view, this is simply creating conditions for manipulating the ruble exchange rate in the interests of currency speculators’.... He summed up that the main beneficiaries of the monetary policy pursued by the Central Bank are precisely the currency speculators....”

In his earlier July 6 interview, Glazyev said that the Central Bank’s float of the ruble (leading to its devaluation) is not a plot, just “incompetence.” It deters investment. There is no objective reason for devaluation; the balance of trade is still positive. The cause of the shortage of foreign currency is that the Central Bank has quietly abolished the President’s decree on the mandatory sale of 80% of foreign currency export earnings ... so more and more earnings are being kept offshore; this is de facto capital flight thanks to the non-imposition of mandatory repatriation of export earnings. Revenue from the sale of Russian subsoil resources, which are a national asset, is sitting in accounts outside the Russian Federation and not yielding a tax revenue stream to the national budget.