02:18 GMT11 April 2021
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    The Russian government is considering a plan to decrease the economy’s dependence on the dollar as President Vladimir Putin blasted the US for using its currency as a tool to promote its policies.

    Dr. Michael Ivanovitch is an independent analyst focusing on world economy, geopolitics and investment strategy, has commented on the news in an interview with Sputnik.

    Sputnik: Russian President Vladimir Putin said at the Russian Energy Week 2018 that Washington’s sanctions policy undermines the dollar's credibility as a reserve currency. Mr. Putin added that the US is “biting the hand that feeds them." Do you agree with this statement?

    Michael Ivanovitch: At the moment, there is no evidence of a declining world demand for dollar-denominated assets. Over the last twelve months, the dollar is stable in trade-weighted terms, and the dollar/euro exchange rate is now roughly where it was a year ago.

    The real question is whether there can be a viable alternative to take the role of the dollar – on a global scale — as a unit of account, means of payment, transactions currency and a store of value. 

    Sputnik: On Tuesday, The Bell reported that the government was allegedly working on a draft project aimed at the de-dollarization of the Russian economy based on proposals made by Russia's VTB Bank President Andrey Kostin. In your view, do these proposals come at the right time? What benefits will Russia have after switching to other currencies- such as the euro, yuan or ruble- in international trade?

    Michael Ivanovitch: The benefits are in the domain of risk diversification. Every country should diversify its currency holdings to reflect its trading patterns. It’s a matter of matching assets and liabilities.

    Sputnik: What will the consequences be for the US in the event Russia adopts its de-dollarization strategy?

    Michael Ivanovitch: The consequences will depend on the volume of trade and investment flows between these two countries. The bigger these flows are, the bigger the consequences, and vice versa.

    The views and opinions expressed in this article are solely those of the author and do not necessarily reflect Sputnik's position.

    The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

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