The sanctions war is weakening the USD and the euro
The credibility of the dollar and euro is being “strongly shaken” by anti-Russian sanctions, which are causing more and more countries to switch to local currencies in dealings with foreign partners, Kremlin spokesman said. Dmitry Peskov said.
“In fact, amid the ongoing sanctions war, the credibility of the dollar and the euro has been shaken, especially the role of the dollar as a major reserve currency.” Peskov said in an interview with Belarus-24 TV channel.
The Kremlin spokesman also mentioned the fact that more and more countries are turning to local currencies in transactions.
“This process is still in its early stages, but stopping it is impossible,” he said. Mr. Peskov stressed that the entire Bretton Woods system “which has allowed America to stay at the top of the world economic triangle for decades… is now waning.”
The Bretton Woods system built an international currency exchange system, using the US dollar as a single measure of international currency payments and reserve storage. However, now, according to Mr. Peskov, this system “will be completely erased” when countries “convert the transaction to the local currency and this reality will expand”.
The Kremlin spokesman said that the world can only benefit if the above mechanism changes.
Although trading in local currency existed before that, it was not common. Last month, several Western countries, mainly Europe and the United States, imposed sanctions on Russia over the war in Ukraine.
As part of the sanctions packages, most of Russia’s assets abroad were frozen while the country was excluded from the SWIFT international financial system, which undermined Russia’s ability to trade with foreign currencies. foreign partners in euros and dollars. In response, last month, Moscow announced that it was changing the export payment mechanism for “unfriendly” countries that imposed sanctions on Russia, starting with natural gas. Gas buyers must now create ruble payment accounts at Russian banks so that payments to Russian suppliers can be made. In addition, Russia is also discussing with a number of foreign partners, including India and Turkey, proposals to establish a payment system in each other’s local currencies to avoid having to pay in dollars and euros. .
These steps are just the beginning of a larger change, Mr. Peskov said. While Russia is currently only changing the payment procedure for natural gas exports and only to those deemed “unfriendly” countries, the move itself could set a precedent and could applicable to other industries as well as to other partners.
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