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23 Dec, 2020 12:18

US sanctions may lead to dollar’s demise, Russian central bank warns

US sanctions may lead to dollar’s demise, Russian central bank warns

The greenback may fall victim to Washington’s sanctions, as these policies force global players to ditch the US dollar and switch to national currencies in trade, according to the Central Bank of Russia (CBR).

“Active use of the sanctions regime by the US administration in recent years is something that seriously undermines the reliability of the dollar as means of savings and payments,” CBR Deputy Chairman Aleksey Zabotkin said as cited by Russian media on Wednesday.

The official noted that this will result in a reduction of the use of the US currency over the years. While the US is not expected to change its sanction rhetoric, we could see more and more countries opting to trade in national currencies, he added.

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Russia has been long calling on its partners to boost non-dollar payments. During the Shanghai Cooperation Organization (SCO) summit last month, Russian Prime Minister Mikhail Mishustin said that the member-states should develop dollar-independent settlements and expand trade in national currencies.

While the dollar has long been the top currency for international payment transactions, it was recently outpaced by the euro for the first time in seven years. According to data from SWIFT, 37.8 percent of cash transfers in the system were completed in euros in October, while the share of the dollar transactions dropped to 37.6 percent.

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