(Kitco News) Russia is proposing its own international standard for precious metals after getting banned by the London Bullion Market Association (LBMA). And it could have a fixed price in national currencies.
The country’s Finance Ministry said it is “critical” to create the new Moscow World Standard (MWS) to “normalize the functioning of the precious metals industry” and have an alternative to the LBMA.
“The basis of this new structure will be a new, specialized international precious metals brokerage headquartered in Moscow, which will rely on the MWS,” the Finance Ministry said in a letter quoted by Russian media.
Russia is also proposing to fix prices of precious metals in the national currencies of key member countries or via a new monetary unit — such as the new BRICS currency proposed by Russia’s President Vladimir Putin.
The price-fixing committee would include central banks and other large banks from the Eurasian Economic Union (EEU). Member states of the EEU are Russia, Kazakhstan, Belarus, Kyrgyzstan, and Armenia.
The idea would be to make membership attractive to big gold players like China, India, Venezuela, Peru, and other South American countries.
According to the letter published by the Finance Ministry, the creation of such an organization would quickly destroy the monopoly of the LBMA and ensure the stable development of the precious metals industry in Russia and around the world.
It was also clarified that the proposal for the new standard did not originate from the Finance Ministry but was received from market participants.
According to the Finance Ministry, Russia was the second highest gold producer by volume in 2021, with gold output rising by 9% to 343 tons. Russia is also one of the three largest producers of platinum, palladium and rhodium. The precious metals industry in Russia accounts for around $25 billion a year.
Following Russia’s invasion of Ukraine, the LBMA suspended its accreditation of Russian precious metals refiners, barring them from selling new products in London. The suspension was made official on March 7.
The Finance Ministry said that the action paralyzed Russia’s precious metals activities and was a critical negative factor.
This contradicts what many analysts have dubbed a largely symbolic move by the LBMA.
