Russia’s 600% Gold Increase, While Another State Bans CBDCs

Russia announces a gold-buying spree that has global economists taking notice. Also, the hot battle over central bank digital currency flipped dramatically in North Carolina. What do these developments say about the world’s trust in CBDCs and fiat currency in general?

Russia's Daring Gold Move

Russia is preparing to heavily expand its gold purchases, announcing a 600% increase in its buy orders for the next fiscal month. The Russian Finance Ministry will set aside $1.9 billion to buy foreign currency and gold from Sept. 6 to Oct. 4. That equates to daily allotments of 8.2 billion Rubles. This is a sharp increase compared to the previous month when the daily purchases were set at just 1.12 billion Rubles.

Several factors contribute to this drive. The BRICS summit, as it is known, could be one factor. It's scheduled for October 20-22nd in Russia and comes amid increased geopolitical tensions and economic insecurity. This move by Russia also falls in line with a general strategy by the nations of BRICS to decrease their reliance on the U.S. dollar and to build up their financial reserves.

Although Russia's aggressive gold-buying spree comes amid seasonal challenges, September has usually tended to be a weak month for gold, with an average 3% decline. This move may signal a strategic hedge against global economic instability. The fact that this is happening in tandem with ongoing Western sanctions and the growing focus on de-dollarisation makes this move by Russia all the more interesting.

North Carolina's Ban on CBDC

Across the globe in the U.S., North Carolina leads the headlines in opposition to CBDCs. The state's General Assembly passed House Bill 690, which prohibits the implementation of a Federal Reserve-issued CBDC in North Carolina, after a veto by Governor Roy Cooper was overturned by the Senate in a 27-17 vote on September 9. This is after a vote in the House in August that saw lawmakers vote to override Cooper's veto.

The North Carolina move is part of a wider debate about the potential CBDC risks and benefits. Proponents argue that a digital dollar would offer faster, more efficient financial transactions; opponents, including those in North Carolina, worry about privacy, government overreach, and centralisation of financial power.

Scepticism Across the Globe

These recent developments show a global trend of scepticism about centralised money backed by nothing. These could have large implications for markets from a global perspective. This could encourage other BRICS allies to use a similar strategy against the U.S., increasing the demand for gold. Meanwhile, North Carolina may allow other states to reconsider the issue of digital currencies, paving the way for more discussion on what money will look like in the U.S.

All this, the upcoming BRICS Summit, and the U.S. election align to make this period in time a potential powder keg.