In a statement that sent shockwaves through the global financial community, a prominent Russian banker predicted that the Chinese yuan is all set to replace USD as the world’s reserve currency. This stunning assertion by the banker, whose name has been withheld for security reasons, has reignited the debate surrounding the dominance of the US dollar and the rise of China’s economic power.
The chairman of Russia’s second-largest bank asserts that there are compelling indications pointing towards the Chinese yuan replacing the USD as the world’s primary reserve currency. He emphasised that the Central Bank of Russia has initiated the investment of its yuan reserves, highlighting that over 70% of the trade volume between Russia and China is settled in yuan, alongside the ruble.
Anticipated: VTB Bank President foresees Chinese Yuan supplanting US Dollar as Global Reserve Currency
Reportedly, Andrey Kostin, the Chairman of VTB Bank in Russia, expressed during a recent Russian-Chinese business forum in Shanghai that he expects the Chinese yuan to assume the role of the world’s reserve and settlement currency, replacing the US dollar within the next decade.
Quoted by Sputnik, the executive remarked that China currently holds the position of the world’s second-largest economy and is on the cusp of becoming the largest.
“There is every reason to expect that the Chinese yuan will replace the U.S. dollar as the world’s main reserve and settlement currency as early as the next decade.”
Continuing his statement, Kostin highlighted that the Central Bank of Russia is already directing its reserves into yuan, and a significant portion of the trade volume between Russia and China, exceeding 70 per cent, is settled in yuan along with the ruble.
The Hegemony of the US Dollar: VTB Bank Chairman’s Critique of the Monetary System
According to the VTB Bank chairman, the current monetary and financial system, which has been established for several decades, reinforces the dominance of the United States and its Western allies. This dominance is manifested through the widespread use of the US dollar and the euro, which together account for 75 per cent of global settlements.
The chairman emphasized that although the US dollar holds the position of the world’s primary reserve currency, the collective Western powers, notably the United States, have utilized the USD as a tool of influence and control.
In February, the US Treasury Department made a significant announcement, imposing “unprecedented” and “expansive” sanctions on VTB Bank and Sberbank, the two largest banks in Russia.
Strengthening Economic Ties: Russia & China embrace National Currencies in Trade Relations
The economic relations between Russia and China have been steadily growing stronger, with both nations actively promoting the use of their respective currencies in trade. In a significant development, the Chinese yuan surpassed the US dollar as the most traded currency in Russia during April. This trend is anticipated to persist as both countries strive to decrease their dependence on the US dollar and foster greater currency independence.
As concerns mount over the weaponization of the US dollar, numerous voices have cautioned that this could ultimately result in the loss of its status as the world’s primary reserve currency. In response, an increasing number of countries are advocating for the utilization of their own national currencies, aiming to reduce their reliance on the USD. Notably, the BRICS economic bloc has intensified its de-dollarization efforts, even proposing the creation of a common currency.
Furthermore, ten Southeast Asian nations have agreed to promote the use of national currencies, while high-ranking officials from nine Asian countries convened in Iran to discuss measures related to de-dollarization. However, despite the growing trend towards de-dollarization, the International Monetary Fund (IMF) does not foresee an immediate and substantial shift in USD reserves.
The Russian banker’s prediction of the Chinese yuan to replace the USD as the world’s reserve currency has sparked intense debate. While de-dollarization efforts and growing economic ties between Russia and China are notable, the future of the global monetary system remains uncertain.
Also Read: Brazil’s President Lula Advocates for BRICS Bank as a Viable Alternative.
