Integration of the payment space of the Eurasian economic union: the potential of sovereign digital currencies

Semeko G.V.

Abstract

One of the most important areas of integration processes in the Eurasian Economic Union (EAEU) at present is the improvement of settlements and payments between countries. After the start of the Russian military special operation and the imposition of sanctions against the Russian financial system, the discussion around the use of sovereign digital currencies in cross-border payments intensified in the EAEU countries. Settlements in digital currencies have significant advantages over the current payment practice based on correspondent agreements between banks. In particular, they are characterized by high speed of operations, lower costs, greater reliability, transparency, etc. Russia, Kazakhstan and Kyrgyzstan have adopted the concept of issuing sovereign digital currencies for domestic retail payments. The next stage may be the expansion of the use of these currencies for wholesale transactions and mutual settlements, and in the future – the transition to settlements using a common digital currency on a common payment platform based on distributed ledger technology. Projects for issuing wholesale sovereign digital currencies for cross-border payments are currently being developed in a number of countries. The first results of their testing indicate the technological feasibility and benefits of digital payment systems. The article argues that the creation of a common payment space based on digital currency in the EAEU will give a new impetus to the expansion of trade and investment flows and the movement of financial assets, which will contribute to the development of cooperation between countries in various sectors of the economy.

Keywords

Eurasian Economic Union; central bank digital currency; cross-border payments; digital payment systems; de-dollarization of cross-border settlements; common payment space.

DOI: 10.31249/rsm/2023.03.03

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