Ukraine: economist Bruni, ‘to pay Russia gas in rubles, propaganda move’

“A propaganda announcement, a kind of Putin insult to hard currencies”, with the risk that it translates into “a self-defeating move”. Franco Bruni, emeritus professor of Theory and International Monetary Policy at Bocconi University in Milan, describes the decision of the Russian President, Vladimir Putin, to charge in rubles for the supply of natural gas to countries defined as ‘hostile’. Contacted by Adnkronos, Bruni explains that “there is a lot of perplexity about this decision and the possibility that it can be translated into precise rules”. Vice president of ISPI and co-president of the Europe and Global Governance Observatory, Bruni stresses that asking to pay gas in rubles to strengthen the Russian currency against other currencies “would not make sense if the Russian Central Bank could use the euros and dollars received to buy the rubles herself “. But Bank Rossiya today cannot freely intervene on exchange rates due to the sanctions decided after the invasion of Ukraine that have affected its reserves. For the economist, the goal of Russian President Vladimir Putin is to “try to replace us with the Central Bank in supporting the ruble”. But the move may not work. So much so that the surge in the ruble against other currencies observed after the announcement “is not due to the measure itself, but to speculation, which thinks that this measure will have some effect”. The problem, Bruni underlines, “is where to find the rubles: there aren’t that many around. We have to buy the rubles to pay for oil, but if the rubles aren’t there, the Central Bank would normally give them to us”. Not in this case, however. If the Russian central bank started printing money to give rubles to European companies to buy gas and oil, “support for the ruble would vanish immediately. They create more and we ask for more, but there is no increase in the ruble. net demand for rubles “. But if Russia persists with this measure, European countries could have serious difficulties in buying gas, precisely because of a shortage of rubles. So much so that, according to some observers, if this measure were really implemented, “it would probably have the effect of shooting in the foot, because Russia would lose the hard currency it so badly needs”. The request to use rubles for the payment of gas could instead make sense in the medium to long term. “It could actually make the ruble necessary for the precautionary transaction stocks of central banks. This move would increase the demand for rubles in the medium to long term and make it a currency with a greater international role, but in the short term it is useless,” he concludes. ‘economist.