• According to Andrey Kostin, CEO of VTB Bank, significant changes are occurring in the global economy. 
• JPMorgan recently highlighted emerging signs of de-dollarization in the global economy.

Andrey Kostin, CEO of VTB Bank, mentioned in a recent Reuters interview that US sanctions are pushing Russia and countries to use currencies other than USD for international transactions due to restrictions on reserves.

According to him, significant changes are occurring amidst the crisis in the global economy. This is happening at a time when China is rising as a prominent global economic power. Kostin added that the era of the US dollar’s supremacy is coming to a close, and he believes that China will progressively lift currency restrictions. He further stated that;

The long historical era of the dominance of the American dollar is coming to an end, I think that the time has come when China will gradually remove currency restrictions.

Kostin also said China imposes strict foreign exchange regulations on individuals and institutions, limiting money flow across its borders. However, he acknowledged that China is aware of the limitations of maintaining the yuan as a non-convertible currency if it aims to achieve global economic leadership. Additionally, he expressed apprehension regarding the potential risks associated with China’s decision to invest its reserves in U.S. sovereign bonds.

In the 20th century, the U.S. dollar surpassed the pound sterling and became the dominant global reserve currency. However, JPMorgan recently highlighted emerging signs of de-dollarization in the global economy. The remarkable economic growth of China over the past four decades, along with the consequences of the Ukraine conflict and ongoing debates about the U.S. debt ceiling, have prompted a renewed scrutiny of the dollar’s status.

Kostin’s remarks hold significant weight amid the ongoing discussions between Vneshekombank (VTB), Russia’s second-largest bank, and countries beyond China regarding using the yuan for trade settlements. The ongoing debate is gaining momentum due to concerns that Washington, dominated by the US dollar, is weaponizing the global financial system against Russia in the context of the Ukraine conflict.

These concerns are prompting countries worldwide to seek alternative currencies for trade, as the sanctions imposed on Russia for its invasion of Ukraine have raised alarms among prominent world leaders and business figures about the extent of Washington’s influence. Bitcoin could be an excellent alternative as it does not require processing from any government or financial institutions and cannot be banned or restricted in any way.

In a statement reported by Reuters, Kostin emphasized that the conflict is far from a mere “cold war,” given the presence of Western weapons, services, and military advisers. He expressed deep concern about the severity and alarming nature of the situation.

Despite the impactful sanctions imposed on Russia and its economy, Kostin conveyed his confidence in the country’s ability to adapt. VTB, as reported in April, experienced a substantial loss of $7.7 billion in 2022 due to Western sanctions. However, with acquiring a rival Russian bank, the bank foresees achieving record profits in 2023.

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