Russian Banker Predicts End of Dollar Dominance – Andrey Kostin, the chairman of VTB Bank, Russia’s second-largest bank, has made a prediction regarding the decline of U.S. dollar dominance. In an interview with Reuters, he stated that he believes the era of U.S. dollar dominance is coming to an end. Kostin attributed this shift to the growing influence of the Chinese yuan and the global recognition of the repercussions stemming from unsuccessful Western sanctions that aimed to weaken Russia during the Ukraine crisis.
Kostin further emphasized that China is aware that in order to become the leading global economic power, they must gradually remove currency restrictions and make the yuan a convertible currency. He pointed out that the actions taken by the United States and the European Union to freeze a substantial amount of Russian sovereign assets would result in losses for both parties.
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As a consequence, many countries have intensified their efforts to reduce their reliance on the U.S. dollar and instead conduct trade using their respective national currencies. Notable examples include the BRICS nations (Brazil, Russia, India, China, and South Africa), 10 member countries of the Association of Southeast Asian Nations (ASEAN), and an additional nine Asian countries.
Moreover, the BRICS economic bloc has put forth a proposal for a unified currency, which is anticipated to be a topic of discussion at their upcoming summit of leaders. The Russian banker stressed: “The long historical era of the dominance of the American dollar is coming to an end.” “I think that the time has come when China will gradually remove currency restrictions,” he added. “China understands that they will not become world economic power number 1 if they keep their yuan as a non-convertible currency.”
Last month, he expressed a similar opinion in an interview with Sputnik. “There is every reason to expect that the Chinese yuan will replace the U.S. dollar as the world’s main reserve and settlement currency as early as the next decade,” the banker shared. Kostin also provided his thoughts on the sanctions imposed on both him and VTB Bank by the U.S. government. In February 2022, the U.S. Treasury Department announced wide-ranging and unprecedented sanctions targeting VTB Bank and Sberbank, which are the two largest banks in Russia.
Furthermore, Kostin personally faced sanctions from the U.S. in 2018, citing Russia’s alleged disruptive actions on the global stage. Subsequently, he was also subjected to sanctions by the European Union and Britain, with the latter labeling him as a close associate of Putin. Kostin expressed his belief that these sanctions were unjust and driven by political motivations. He went on to predict that they would ultimately lead to adverse consequences for Western countries.
Regarding the Russia-Ukraine war, the banker warned: “We have already entered into a hot war. It is not cold when there are so many Western weapons and a lot of Western services and military advisers involved. The situation is worse than in the Cold War, it is very difficult and alarming.” Kostin opined: “Sanctions are bad, and we suffer from them, of course. But the economy has adapted. At the same time, we expect that sanctions will intensify, they will be tightened, some windows will be closed, but we will also find other opportunities.”