The end of US dollar dominance is near as the Chinese yuan appreciates, and the rest of the world recognizes the danger that the West’s attempts to bring Russia to its knees over Ukraine will fail. , one of Moscow’s most powerful bankers told Reuters.
Andrei Kostin, CEO of state-owned VTB, Russia’s second-largest bank, said the crisis had caused profound changes in the global economy, just as China assumed the role of the world’s top economic power. He said it undermines some globalization.
RELATED: The End of King Dollar?
Asked if he thought the world was in a new Cold War, Kostin said it was a “hot war” that was more dangerous than the Cold War.
He said the move to freeze hundreds of billions of dollars of Russian state assets would leave the United States and the European Union with more countries moving to payments and settlements other than the U.S. currency and the euro, while China moves toward abolishing its currency. said it would suffer losses. limit.
“The long history of U.S. dollar dominance is coming to an end,” Kostin, 66, told Reuters on the 59th floor of the gleaming VTB (VTBR.MM) skyscraper overlooking southern Moscow. . “I think the time has come for China to gradually lift its currency restrictions.”
“China understands that it cannot become a global economic power if it maintains the yuan as a non-convertible currency,” Kostin said, adding that it would be dangerous for China to continue to invest its foreign reserves in U.S. Treasuries. .
The U.S. dollar has dominated since it overtook the pound as the world’s reserve currency in the early 20th century, but JP Morgan said earlier this month that signs of de-dollarization were emerging in the global economy.
China’s remarkable economic development over the past four decades, the aftermath of the Ukraine war and the dispute over the US debt ceiling have put the dollar’s status under renewed scrutiny.
VTB is in talks to use renminbi for settlements with third countries, Kostin said.
“Hot War”
A former Australian and British diplomat who entered the banking industry shortly after the collapse of the Soviet Union, Kostin was once the president of Vnesekom Bank, now known as VEB, and is one of Moscow’s most influential and experienced bankers. is one of
After President Vladimir Putin sent troops to Ukraine last February, the West imposed its toughest sanctions ever aimed at undermining Russia’s economy and punishing Putin for war.
Kostin was sanctioned by the United States in 2018 for Russia’s malicious activities around the world. After the war, he was sanctioned by the EU and the UK, and called him “President Putin’s closest aide.”
He said the sanctions were unfair and a political decision that would “backfire” for the West, quipping that he had read an interesting article about laundering drug money through big Western banks.
“We are already in a hot war,” Kostin said of the Ukraine crisis. “It is not cold when there is so much Western weaponry and so many Western soldiers and military advisers involved. There is.”
Kostin said VTB was on track to make 400 billion rubles ($4.9 billion) in profit in 2023 after posting a record loss last year after the first five months of the year.
He said the Russian economy will not be destroyed by the West. In April, the International Monetary Fund raised its GDP growth forecast for Russia in 2023 to 0.7% from 0.3%, but lowered its forecast for 2024 to 1.3% from 2.1%.
“Sanctions are bad and of course we suffer from them. But the economy has adapted,” he said. “At the same time, we expect sanctions to be tightened and some windows to be closed, but we will also find other opportunities.”
“I hope so,” Kostin said when asked if the Russian economy would remain free.
