Digitalization of International Settlements: Tradecoin vs US Dollar

DOI: 10.20542/0131-2227-2023-67-7-33-43
I. Balyuk,
Financial University under the Government of the Russian Federation, 49/2, Leningradskii Prosp., Moscow, 125167, Russian Federation.
M. Balyuk,
Independent Researcher, Russian Federation.

Received 13.02.2023. Revised 10.04.2023. Accepted 03.05.2023.

Abstract. Russia as the main object of the Western sanctions is forced to look for alternative mechanisms of international settlements. The establishment of a new mechanism of international settlements without the US dollar is the basic condition for further transformation of global monetary system, which will become an incentive for the development of fair international relations. Digitalization provides new opportunities for world economy. At present trading on digital platforms using electronic payment units actively competes with traditional forms of trade relations. The level of digitalization of world economy makes it possible to create a new system based on fairer relations and attracting more countries. There is not only a technical, but also social and economic option to replace the US dollar in international economic relations with more universal, convenient and reliable instruments that do not have national affiliation and political engagement. The authors propose to establish a digital international settlements platform (DISP) which makes it possible to guarantee avoiding external data manipulation. Such a platform could provide participants with the possibility of using national currencies in international settlements, with cross rates based on real purchasing power. Purchasing power of currencies can be determined by comparing domestic prices expressed in national currencies for widely used goods or a basket of goods. The distinguishing feature is the possible standardization to ensure correct comparison. Comparing the price level for a specially formed basket of similar goods will facilitate to determine the cross rates of currencies more correctly, excluding the speculative component. The average cost of the basket will determine the value of digital international currency asset (DICA) and its exchange rate to national currencies. A pilot project of implementing a new mechanism of international settlements can be initiated by Russia within BRICS with a participation of countries wishing to join it.

Keywords: global monetary system, international settlements, digitalization, foreign trade, money functions, digital international currency asset (DICA), purchasing power parity, tradecoin


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For citation:
Balyuk I., Balyuk M. Digitalization of International Settlements: Tradecoin vs US Dollar. World Eonomy and International Relations, 2023, vol. 67, no. 7, pp. 33-43. EDN: KEIJZA

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