Russia’s second-largest bank’s chairman has predicted the end of U.S. dollar dominance. He believes that the Chinese yuan will replace the U.S. dollar as the dominant currency. “I think that the time has come when China will gradually remove currency restrictions,” he noted, adding that “China understands that they will not become world economic power number 1 if they keep their yuan as a non-convertible currency.”
VTB Bank President Predicts End of U.S. Dollar Hegemony
Andrey Kostin, the chairman of state-controlled VTB, Russia’s second-largest bank, discussed the potential end of U.S. dollar dominance in an interview with Reuters, published Friday. He expressed his belief that the era of U.S. dollar dominance is drawing to a close, attributing it to the increasing prominence of the Chinese yuan and the global recognition of the consequences resulting from unsuccessful Western sanctions aimed at undermining Russia during the Ukraine crisis.
According to him, the U.S. and the European Union would lose due to their moves to freeze hundreds of billions of dollars of Russian sovereign assets. This prompted numerous countries to ramp up efforts to shift away from using the U.S. dollar and settle trades in national currencies, including the BRICS nations (Brazil, Russia, India, China, and South Africa), 10 ASEAN member countries, and nine more Asian countries. The BRICS economic bloc also has a proposal for a common currency that is expected to be discussed at their upcoming leaders’ summit.
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 commented on the sanctions imposed on him and his bank by the U.S. government. In February 2022, the U.S. Treasury Department announced “unprecedented” and “expansive” sanctions against VTB Bank and Sberbank — Russia’s two largest banks.
Moreover, the U.S. imposed sanctions on Kostin in 2018 due to 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 referring to him as “a close associate of Putin.” Kostin expressed his view that these sanctions were unjust and driven by political motives, predicting that they would ultimately have negative 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.”
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