The role of hard currency in the economy of Russia
( Pp. 228-231)

Various types of foreign currencies, especially the so-called freely convertible or hard currencies, play a significant role in the economy of Russia. Among the latter, the most sought-after and most widely used became the U.S. dollar, which in the 1990s actually pushed aside the Russian ruble and became the second (and in terms of trustworthiness – the first) national financial instrument. After the collapse of the Soviet Union, the need of the Russian economy in hard currency had increased significantly because debt payments have reached astronomical sums as Russia not only took the entire debt of the Soviet Union, but also borrowed foreign currency wherever it could to feed the population and provide for the industrial production needs. Gradual improvement of the country’s financial health and involvement in the global economy have created a need for gold and hard currency reserves as a "safety cushion" to protect Russian economy from global and domestic economic and financial crises. Growth in demand for hard currency was also caused by import growth, especially to support the defense industry. Originally, the source of hard currency in Russia, as in other developing countries, was export growth (primarily in oil and gas), sale of securities on Western stock exchanges, loans and other investments in manufacturing, construction and trade. At the same time, government and commercial organizations have been investing hard currency in industrial, transportation, and other types of real estate abroad. In addition, the investments of the state and individuals in "safe" securities with a view to safeguarding the accumulated hard currency and receiving interest income also played an important role. Significant foreign currency amounts are regularly transferred to the neighboring countries by citizens of these countries working in Russia, while at the same time Russian citizens transfer funds abroad to open accounts in foreign banks (mainly offshore) and to buy foreign real estate property. A prime example of the consequences of such foreign currency activities was the banking crisis in Cyprus.

Odess V.I., (2013), THE ROLE OF HARD CURRENCY IN THE ECONOMY OF RUSSIA. Business in Law, 5 => 228-231.

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currency, freely convertible currency, the gold standard, foreign loans, debt repayment, the financial crisis, the attraction of foreign currency funds, the withdrawal of monetary funds, banks in the offshore.