What is the system of issue of Russian Rubles? How much have currency the Bank of Russia can issue at a particular time? Is Ruble backed by gold reserves or issued against holding of government securities? In what proportion?
The monetary strategy of the central bank of Russia is to d-evaluate the Ruble by supply and demand (Dollar, Pound Sterling, Yen, Euro do not apply this 'tactical concept'); no wonder that Mr.Trump does not like 'this flexibility', just think at 'sanctions'. The Ruble is a modern fiat currency; otherwise, the applied strategy could not work.
Thank you Murray,
Can you please cite a source.
Regards
Masood Rezvi
The Ruble is the most gold-backed currency on the market (V. Putin is right on that, theoretically); government bonds are also issued and traded, e.g. to private investors and banks. This cannot save Russia from the ongoing global economic (monetary) warfare, because the world accounting system is a fiat construction. Take a look at the Glazyev bio, and you will learn more about the political depth of the problem.
But (Stephen in particular) what effect does its gas resources have on sustaining the ruble? Whenever I inquire about Russian economic health, this assertion is what I tend to get.
Natural resources alone can not sustain the Ruble. The advantage of the US in this global rivalry of capitalist states is that it is a multi-functional hegemon. Russian strategy is long-term orientated, while the West generally settles for short-term bargains. I have to point again to the political depth of the problem, which the Glazyev bio represents very well.
Russia will diversify its industrial base beyond the production of energy and step in neglected consumer markets. It even boosted its foreign reserves, by buying huge amounts of US debt (treasury securities).
How? This I haven't yet seen. Is it possible that Russia's adventures in the Middle East have a financial purpose? Just a thought.
@Stephen can you kindly cite a source, a book or an statute which mentions how much gold backed the ruble is? What proportion of gold the Bank of Russia has to maintain as reserve against the volume of ruble in circulation?
In fact, Article 28, of the FEDERAL LAW On the Central Bank of the Russian Federation (Bank of Russia) states that
"No official ratio shall be set between the rouble and gold or other precious metals."
Article 30. adds that
"Bank of Russia banknotes and coins shall be unconditional obligations of the Bank of Russia, secured by all its assets."
The law, it appears, is silent about any backing by government security or foreign currency.
Just if someone could elaborate ...
@ S M Masood Azhar Rezvi
Yes, you are right. The Ruble is a legal fiat currency. Even the envisioned Eurasian Economic Union will use a newly 'created' fiat currency (PDF). The most prominent advocate of the gold standard ('the yellow brick road') is Prof. Jesus Huerta de Soto of Madrid. The behavioral dynamics of any stock market in the world depends on fractional reserve banking: the lower the reserve ratio, the faster the market in a fiat economy.
- Badges
- Science topic
- Similar topics
- Political Science