Bloomberg/Firat Kozok/7-19-2022
“The mechanism under consideration could allow Turkey to use liras for energy imports, saving more of its foreign-exchange reserves, one of the officials said. Any payment made in the Turkish currency could later be used by Moscow to finance Russian purchases of goods and services from Turkish providers. Similarly, rubles would have to be part of any arrangement between the two nations, the official said.”
USAGOLD note: The problem for both countries in using the other’s currency for settlement is that, in both cases, the payee will be holding a currency subject to the other’s depreciation. Ultimately, that is why gold utilized in the same mannger is the better alternative. Neither is required to trust the other’s monetary policies. We would be surprised if the arrangement outlined in the snippet above went beyond the discussion stage. If gold is out of the question, a more likely alternative would be to use a trusted third-party currency. Earlier this week, Russia requested payment from India in UAE’s dirham for some recent oil shipments.
