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Russia is considering digital currencies as one of its accepted means of payment for oil and gas, the BBC has reported, citing a Russian lawmaker.
According to Pavel Zavalny, head of the parliamentary energy committee, friendly countries that buy oil from Russia could pay in their local currencies or in cryptocurrencies. For the unfriendly ones, President Vladimir Putin said earlier this week that Russia will demand payment for gas in rubles.
China and Turkey were among the friendly countries that could switch to local currencies, Zavalny also said. "We have been proposing to China for a long time to switch to settlements in national currencies for roubles and yuan," Zavalny said, as quoted by Russian media. "With Turkey, it will be lira and roubles."
"You can also trade bitcoins," Zavalny also said.
The BBC quoted an energy researcher as noting that bitcoin could be an alternative to fiat currencies in payments for Russian oil and gas, but it is a highly volatile alternative.
"Russia is very quickly feeling the impact of unprecedented sanctions," David Broadstock, senior research fellow at the Energy Studies Institute in Singapore, told the BBC. "There is a need to shore up the economy and in many ways, Bitcoin is seen as a high growth asset."
He then went on to note that the value of the digital currency has experienced swings of as much as 30 percent since the start of the year, compared with just 5 percent for the U.S. dollar.
Earlier this week, President Vladimir Putin said that Russia would demand payment in rubles for its gas deliveries to Europe.
"I have taken a decision to switch to ruble payments for our natural gas supplies to the so-called hostile states, stop using the compromised currencies in such transactions," Putin said.
Separately, the Russian president said that "At the same time, I want to emphasize that Russia will definitely continue to supply natural gas in line with the volumes and prices, pricing mechanisms set forth in the existing contracts."
European governments have balked at the demand, saying it would constitute a breach of contract.
"This would be a unilateral decision and a clear breach of contract, and it would be an attempt to circumvent the sanctions," European Commission President Ursula von der Leyen said following the news.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.