Russian Ruble as an International Reserve Currency

Abstract

Can the Russian ruble become an international reserve currency? By identifying the key determinants of the international status of national currency this paper estimates possibilities of the ruble. The significant determinants include: the size of the home country, inflation rate, exchange rate volatility, the size of the relevant home financial market, and network externality. The author believes that several factors are in favor of the Russian currency, in particular the turnover and liquidity of foreign exchange market, the size of foreign trade, the development of international market of debt securities in Russian ruble. The paper discusses some important policy implications of internationalization of the ruble for the Bank of Russia and the Russian economy in general.