By George Ward
Sber, also known as Sberbank, is the largest bank in Russia. The bank has announced the first issue of its digital financial asset, which is backed by the precious metal (gold). The largest Russian bank has regarded Digital Financial Assets (DFAs) as an excellent investment option. The US dollar will be replaced as the currency for trading oil and other commodities.
Note that gold-backed digital financial assets represent a certified monetary right and that the volume and price of these digital financial assets will depend on the value of the precious metal. Sberbank announced the news about the new investment product on Monday.
According to a legal document for the issuance of this product, the bank will make 150,000 digital financial assets (DFAs) available to potential client investors for purchase. The paper further shows that these digital financial assets will be available until July 2023.
The documentation further mentioned this asset class’s high risk to potential investors. Sberbank states that illiquidity risk is one such risk.
A Replacement For Traditional Investments?
The deputy chairman of the executive board of Sberbank, Alexander Vedyakhin, said that these kinds of digital financial assets would replace traditional investments.
He further said that these digital financial assets would replace the United States dollar as the currency for global transactions. This development was caused by the international sanction placed on Russia due to its invasion of Ukraine earlier this year.
Vedyakhin, the first deputy chairman of the bank, added that they are anticipating a good number of large investors for this investment product to foster faster growth amidst plans to expand it to other regions.
While the current law on digital financial assets became law in 2020, the Russian president passed an updated version of this law in July last year. This revised bill prohibits using digital financial assets (DFA) as a payment method.
Meanwhile, a division of a bank owned by a state in Russia, VTB Factoring, has announced the firm’s first important transaction. This transaction, involving DFAs, took place in June.
In July, Sber launched its first deal incorporating digital financial assets, releasing a 3-month asset worth one billion Rubles.