Moscow International Currency Association asked President Putin to make Russian rouble a hard currency since July 1, 2005
The Association claims that it is time to make the rouble a currency circulated worldwide.
To achieve this purpose, bankers offer to make amendments in the law “On currency regulation” – to cancel “reserving money for many foreign trade operations, mandatory sale of hard currency profit of residents and the requirement for banks to disclose the contracts and other business documents on the deals of their clients”. According to the Moscow International Currency Association, these restrictions slow down economic development as banks have to execute controlling functions.
There are many advantages of being a hard-currency. I the rouble can be exchanged to any currency, the demand for rouble will increase greatly, primarily among those going to invest in Russia. This will increase foreign investments and reduce inflation. It will be easier for Russians to invest their money in Western countries. However, there are some disadvantages as well: if a national economy is weak and produces nothing of value, hard currency flows away from the country to more economically developed countries, and the national currency depreciates. Exactly the same thing happened in East European countries which were quick to pass to hard currency. For this reason, a rouble can be made hard currency only after seeing if Russian economy is strong enough.
The US dollar is a hard currency because it is used for payment by the biggest world economy – the USA. The majority of goods and services is purchased in the USA, and for this reason it is more convenient to accept the US currency worldwide.
Russian President’ decision can make the rouble a hard currency, but it will not add respect to the rouble. In Chicago and Beijing, salaries will not be paid in roubles, and foreign experts will not be preoccupied with the rates offered by Russian Central Bank.