The International Monetary Fund has warned the US government of decline in the US currency’s dominance in global markets because of sanctions imposed on Russia.
Gita Gopinath, first DMD of IMF, has warned the United States of a decrease of the dominance of the US dollar in the world after the unprecedented financial sanctions imposed on Russia.
In a recent report IMF said “the share of reserves held in US dollars by central banks has dropped by 12 percentage points since the turn of the century, from 71 percent in 1999 to 59 percent in 2021.”
The sanctions, from restrictions on Russian banks to curbs on economy, imposed by Western nations, would lead to a more fragmented international monetary system.
“The dollar would remain the major global currency even in that landscape, but fragmentation at a smaller level is certainly quite possible,” Gopinath told the Financial Times.
“We are already seeing that, with some countries renegotiating the currency in which they get paid for trade,” she added.
Ahead of sweeping Western sanctions, Russian President Vladimir Putin said on Thursday that he had signed a decree saying foreign buyers must pay in roubles for Russian gas from April 1.
The contracts would be halted if these payments were not made.
“In order to purchase Russian natural gas, they must open rouble accounts in Russian banks. It is from these accounts that payments will be made for gas delivered, starting from tomorrow,” Putin said.
“If such payments are not made, we will consider this a default on the part of buyers, with all the ensuing consequences. Nobody sells us anything for free, and we are not going to do charity either — that is, existing contracts will be stopped.”
The decision is the last step of Russia’s long campaign to reduce its dependence on the dollar.
