Dollar left. Former Deputy Minister of Finance of the Russian Federation Storchak – about new world currencies and the role of the ruble. Senior banker of VEB.RF Storchak said that it is too early to talk about the end of the dollar era 09/11/2023, 00 :00

— Sergey Anatolyevich, lately there is more and more talk in the world that the dollar era is coming to an end. When could this happen?

— At the current stage, there are few economic prerequisites for de-dollarization of the global economy. The dollar remains the dominant currency in the buying and selling of commodities, especially oil, as well as in pricing and settlement of international reserves and bank deposits. The dollar has more debt through international bond issuance than all other currencies combined. Because of this dominance, talking about the end of the dollar era means wishful thinking.

At the same time, bans and various restrictions on the use of the US financial infrastructure, which are clearly not imposed for commercial and/or economic purposes, create the political prerequisites for initiating a movement towards de-dollarization. The issue of financial sovereignty has entered the agenda of the governments of many countries. This will certainly fuel the already emerging trend towards the use of alternative currencies and means of payment to the dollar.

— How fast can this process happen?

“This cannot happen quickly, given the practices and traditions that have developed in the almost 80 years since the international conference at Bretton Woods that laid the foundation for the dominance of the dollar. This cannot be ignored. Where this is technically possible and economically feasible, the dollar will gradually be replaced by local (local/national) currencies, as is currently the case in the Eurasian Economic Union (includes Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan).

— Are we talking about the development of a reserve currency system? You mentioned that such currencies will emerge in the world in 2022.

— The most striking example of the emergence of a new reserve currency is the Chinese yuan. The situation regarding the Indian rupee is also developing in the same direction. Since 2014, the government of the republic and the Reserve Bank of India have been implementing – very slowly but consistently – a program to internationalize the national currency.

— Will the ruble become a reserve currency?

— The ruble has already become the local reserve currency for our partners in the EAEU, especially Belarus.

— Under sanctions, Russia is increasingly turning to agreements in national currencies with various countries in Asia and the Middle East, such as Iran and China. How successful is it at changing the dollar?

— I have always been impressed by the attitude of the Central Bank of the Russian Federation that the transition to settlements in national currencies is possible only if there is demand from business and the population. So it is wrong to artificially encourage the use of national currencies in international payments. However, it is correct to create conditions that will reduce costs in such calculations. In fact, this is what both the Russian government and the Central Bank are working on. At the same time, we need to clearly understand that there are no simple solutions here. For example, it is extremely important that mutual trade is balanced, that is, the national currency can be used equally successfully for both export and import payments.

— With which countries is Russia currently negotiating agreements in national currencies?

— The largest project in this area in which Russia participates is the implementation of the tasks set in the “road map” adopted in 2022 by the heads of governments of the member countries of the Shanghai Cooperation Organization (which includes Russia, India, Iran). , Kazakhstan, Kyrgyzstan, China, Pakistan, Uzbekistan, Tajikistan – ed.).

In total, around 20 events are planned for the period from autumn 2022 to 2025. For this purpose, a working group was formed consisting of experts from Ministries of Finance, Central Banks and representatives of the business world.

But the main thing is the interests of business, certain economic organizations, in developing the practice of settlement in national currencies.

— Will settlements in national currencies become a global trend?

— We can very accurately state that the transition to national currencies at the regional level has become a trend. The clearest example of this is the broad Eurasian space, which includes not only the EAEU but also Iran, India, China and other countries in the region where relevant processes are already underway. As far as I know, a similar trend is developing in the Middle East and Central America. In other words, economic integration processes are expanding and deepening in countries that are regionally close to each other.

— In one of your speeches, you described the emergence of a single currency of the BRICS countries as a “utopia”. How complex is this process and how long could it theoretically take?

— We were just talking about the current stage of development of economic ties within the framework of BRICS. For the majority of economic organizations in the five members of this association (Russia, Brazil, India, China, South Africa), our markets are not key, despite the high growth rates in bilateral trade. Economic ties with the US and the EU mostly dominate. Hence the dominant use of the dollar and euro.

The emergence of a single currency requires appropriate political and economic preconditions. The transferable ruble was introduced within the framework of an integration union called the Council for Mutual Economic Assistance (CMEA). To work with a single currency, the transferable ruble, and to organize multilateral clearing in trade within the CMEA, the Bank for International Economic Cooperation (IBEC) was established, under which accounts in the transferable ruble were opened for banks authorized by CMEA member countries. VEB.RF – Including predecessors of Vneshtorgbank and then Vnesheconombank.

— Do the preconditions for the emergence of a single BRICS currency now exist?

— Judging by the statements of the leaders of our countries, the political prerequisites for the emergence of a single BRICS currency are gradually taking shape.

The situation is more complicated due to economic prerequisites. As in the CMEA, when countries specialize in the production of certain types of goods for all participants of the bloc (for example, Bulgaria was “responsible for electric cars, Hungary for buses”), as well as the depth of mutual penetration into our economies, GDR for prototypes of computers and electronic computers), BRICS is still so far away.

True, the situation is changing rapidly and therefore the dialogue on the issue of the single currency cannot be considered extreme.

— Some time ago, the issue of a single currency was discussed in the economic sphere of the EAEU countries. So at what stage are these discussions currently?

— Russia’s partners in the EAEU, or rather their economic entities, prefer to expand the practice of using national currencies. I think this describes their attitude towards the emergence of a single currency. At the same time, various events aimed at the modernization of the modern international monetary and financial system are planned within the framework of the events of the Eastern Economic Forum, of which VEB.RF has traditionally been the main partner. First of all, it is in the interest of developing countries. Of course, we will talk about international payments and the risks associated with them, which can best be reduced by using a single currency.