Vladimir Putin predicts the end of dollar hegemony
The main event of this weekend was the Saint Petersburg International Economic Forum. Sharing the stage with his Algerian counterpart, the Russian president predicted the end of the dollar.
Dollar ? Niet.
According to Vladimir Putin, the increasing use of national currencies for cross-border transactions signals the end of the hegemony of the American dollar.
Russia is leading the way by already conducting over 80% of its trade with China using the ruble/yuan pair. The ruble is even involved in 90% of exchanges with the countries of the Eurasian Economic Union.
V. Putin didn’t fail to point out that dollar reserves are dwindling:
“The share of settlements in dollars is decreasing. The share of settlements in yuan is increasing. […] Oil producers from major Arab countries are now ready to accept yuan as payment for their oil. If this trend gains momentum, it will mark the beginning of the end for this currency [the dollar].”
V. Putin also praised the proposed regional currency project by Brazil and Argentina for all of South America. When asked about the question of a common currency for the Arab world by his Russian counterpart, Algerian President Abdelmadjid Tebboune replied:
“I would like that to be the case. Some currencies have been imposed on the entire world. Algeria would like to join the BRICS organization in the near future. We would like to join to no longer suffer certain pressures on our economy. Several countries like Saudi Arabia and the United Arab Emirates have very strong currencies. Perhaps such a decision will be made. We will see what the future holds.”
The boomerang effect of sanctions
The Russian president emphasized that Russia never intended to dedollarize either its national economy or the global economy.
It is the US policy of sanctions against Russia that forced Moscow to abandon the greenback for other currencies:
“By pursuing short-term opportunistic political goals, they [USA] undermine their power, including in global finance. By using the dollar as a weapon, the United States raises doubts about the reliability of their currency as a payment instrument, as well as a reserve asset.”
And the fact is that many countries are inspired by the Russian rebellion. This was seen again recently at the meeting of the BRICS Foreign Ministers. The Washington consensus is crumbling, making way for a multipolar world order.
“The old neocolonial international system has ceased to exist, while the new multipolar international order continues to strengthen,” V. Putin declared during his speech.
The alliances of Russia and China with other countries have given rise to powerful groupings. This includes the Shanghai Cooperation Organization, which represents about 30% of global GDP. But above all, it includes the BRICS, which represent 40% of the world’s population.
It is highly likely that regional reserve currencies will soon emerge under the auspices of the BRICS. As well as new international institutions that will soon outperform those of Bretton Woods (IMF and World Bank).
New world order
IMF Managing Director Kristalina Georgieva recently admitted that the share of the dollar in international reserves is declining. However, she does not expect a sudden decline:
“The share of the dollar in international reserves has dropped from 70% to less than 60%. But we do not expect a rapid change in the composition of reserve currencies. Why? Because it is the strength of the US economy and the depth of its capital markets that make the dollar a reserve currency. Wait a bit before burying it.”
True, but everything becomes simpler when countries of the OPEC are forced to sell oil exclusively in dollars…
Nations are tired of this inverted aid in favor of Uncle Sam. Just this week, Egyptian Minister Ali Moselhy dealt a blow to the dollar.
“Discussions are underway for us to be able to trade in the national currencies of countries like India, Russia, or China,” stated Mr. Moselhy.
Russian Ambassador to Egypt Georgy Borisenko also mentioned that Cairo had officially requested to join the BRICS group:
“Egypt has requested to join the BRICS group due to one of our initiatives to maximize the diversification of currencies used in trade, whether it’s national currencies or the creation of a common currency. Egypt is very interested in this matter.”
Very well, but the thorny question of the reserve currency remains. National currencies, regardless of which ones, remain inflationary Ponzi schemes. Bitcoin with its 21 million units is anxiously waiting in the wings.
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Bitcoin, geopolitical, economic and energy journalist.
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