Global de-dollarization has been active for years as countries like Russia, China, Iran, and others find ways to insulate themselves from the US sanctions. Now, Russian President Vladimir Putin has reportedly backed the de-dollarization plan. What do mean it for Bitcoin and cryptocurrencies now?
Russian President Vladimir Putin on the move for de-dollarization
Dedollarization has been on the move for many years now but looks like it has been sped up with the way latest events are taking a turn. Russian President Vladimir Putin supports removing the dollar as he backs a tentative de-dollarization plan to protect itself from the future US sanctions.
In May, Putin has said that the country can’t trust US dollar-denominated finance system due to violating WTO rules and imposing unilateral sanctions. He also said dollar monopoly is not only unsafe but also dangerous for the global economy.
Andrey Kostin, the head of Kremlin-owned bank VTB now told the local news agency that Putin is supporting the plan that will wean Russia off the US Dollar.
This plan would involve blacklisting the state-owned lenders along with barring them from using US Dollars. However, the plan that has support from the central bank as well as the finance ministry won’t phase out the American currency completely.
The country has been already discussing the idea of de-dollarization due to the sanctions imposed by the US. These further intensified when in August a bill was introduced to Congress that has a number of measures targeting the financial institutions of Russia.
Kostin submitted proposals to move back from greenback and promote Russian ruble in July. The Finance Ministry already supports the plan and reportedly the role of USD is already diminishing in the country. Moreover, the central bank is already pursuing de-dollarization and will continue to do so.
Plan all laid out, others on the move as well
The plan into consideration involves using alternative currencies such as ruble, euro, and the Chinese yuan for carrying out export-import transactions with foreign countries. Furthermore, it also covers re-registration of the largest holdings in Russian jurisdiction and licensing all stock market participants so that all actions by the same rules.
Apart from Russia, China has been actively involved in de-dollarization as the country has been working on eliminating transactions denominated in US Dollars as it did last year in bilateral trade with Iran.
Reportedly, the share of yuan-denominated foreign contracts has reached about 40 percent which is expected to only grow further.
In August itself, Germany’s foreign minister Heiko Maas called for the de-dollarization of the global payment system. Mass has stated that Europe shouldn’t allow the US to act “over our heads and at our expense.”
“For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the US, creating a European Monetary Fund and building up an independent SWIFT system.”
What does this mean for Bitcoin and cryptocurrencies?
Last year, in late September, Christine Lagarde, the head of IMF cautioned that in the long run cryptos can displace central banks and national monies. Though since then reports have been released by many that cryptos don’t pose that risk, over time as awareness, adoption, and interest in crypto rises, in future, the situation could be different.
De-dollarization is not pursued by economies but individuals as well, as financial markets also took to the same trend. The 2008 financial crisis, the abolition of gold standard and creation of petrodollar has been following the aim of extending the USD domination of the global economy resulting in the creation of an unsustainable financial system.
With fiat currencies devaluation, inflation skyrocketing, economy crisis amplifying, de-dollarization accelerating, and another financial crisis looming, people are looking for a safe haven. Bitcoin and cryptos just might offer that sense of security and become a potential alternative choice.
Do you think Bitcoin and cryptos will play an important part in the global economy in the coming days or will they be stuck in the background?
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com