A distinguished and powerful Russian banker says the end of the dominance of the US dollar is nigh as the Chinese yuan rises and the rest of the world sees the peril of the West’s failed attempt to bring Russia to its knees over Ukraine.
Andrei Kostin, the Chairman of Russia’s second largest and state-controlled VTB Bank, told Reuters news agency on Saturday that the ongoing Ukrainian crisis was ushering in sweeping changes to the world economy, undermining globalization just as China was taking on the mantle of a top global economic power.
Kostin said he thinks the world is now in a stage of a “hot war” more dangerous than the Cold War, when asked about the current global state of affairs.
“The long historical era of the dominance of the American dollar is coming to an end,” Kostin noted. “I think that the time has come when China will gradually remove currency restrictions.”
“China understands that they will not become world economic power Number 1 if they keep their yuan as a non-convertible currency,” the top Russian banker said, adding that it was dangerous for China to keep reserves invested in US sovereign bonds.
Kostin emphasized that VTB was discussing using yuan in settlements with third countries.
He also said anti-Russia sanctions were unfair and counted as a political decision that would “backfire” on the West.
“We have already entered into a hot war,” Kostin said of the crisis with Ukraine. “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 said he expected that VTB would see a profit of 400 billion roubles ($4.9 billion) in 2023 after a bumper first five months of the year and a record loss last year.
Russia’s economy, he said, would not be broken by the West. The International Monetary Fund in April raised its 2023 Russian GDP forecast to growth of 0.7% from 0.3%, but lowered its 2024 forecast to 1.3% from 2.1%.
“Sanctions are bad, and we suffer from them, of course. But the economy has adapted,” he said. “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.”
Asked if Russia’s economy would remain a free economy, Kostin said, “I very much hope so.”
Earlier this year, the governor of the Central Bank of the Philippines emphasized that the superior status of the United States ‘dollar’ will gradually decline in the world.
Russian President Vladimir Putin also argued recently that the US dollar and other Western currencies will inevitably lose their leading position in global transactions, because the current policies of Western countries will weaken the supremacy of the US dollar and euro in international payments.
According to the International Monetary Fund (IMF), the US dollar share in the global market downed 0.44 percent in 2022, which is regarded as the largest decline in official FOREX reserve than any other currencies.
