Russia’s second-largest bank’s chairman says there is every reason to expect the Chinese yuan to replace the U.S. dollar as the world’s main reserve currency. He highlighted that the central bank of Russia has already begun investing its reserves in yuan, and over 70% of the trade turnover between Russia and China is settled in yuan along with the ruble.
VTB Bank President Expects Chinese Yuan to Replace US Dollar as World’s Reserve Currency
Russia’s VTB Bank Chairman Andrey Kostin reportedly said at a Russian-Chinese business forum in Shanghai last week that the Chinese yuan will replace the U.S. dollar as the world’s reserve and settlement currency in the next 10 years.
“China is now the world’s second-largest economy and will soon become the first,” he was quoted by Sputnik as saying. The executive added:
There is every reason to expect that the Chinese yuan will replace the U.S. dollar as the world’s main reserve and settlement currency as early as the next decade.
“In fact, the central bank of Russia is already investing its reserves in yuan, and more than 70 percent of trade turnover between Russia and China is settled in yuan together with the ruble,” Kostin continued.
The VTB Bank chairman explained that the monetary and financial system that has been in place for decades ensures the hegemony of the U.S. and its Western allies, with the USD and the euro accounting for three-quarters of global settlements. He stressed that while the dollar is the world’s main reserve currency, the collective West, particularly the U.S., has been using the USD as a weapon.
In February, the U.S. Treasury Department announced “unprecedented” and “expansive” sanctions against VTB Bank and Sberbank — Russia’s two largest banks.
Russia and China have been increasingly strengthening their economic ties and using their national currencies in trade transactions. In April, the Chinese yuan surpassed the U.S. dollar as the most traded currency in Russia. This trend is expected to continue in the future as both countries seek to reduce their reliance on the U.S. dollar.
Multiple people have warned that the weaponization of the U.S. dollar will lead to the USD losing its global reserve currency status. A growing number of countries are pushing for the use of national currencies to reduce their reliance on the U.S. dollar. The BRICS economic bloc has been ramping up its de-dollarization efforts and has proposed a common currency. Ten Southeast Asian nations have agreed to promote the use of national currencies and recently top officials of nine Asian countries met in Iran to discuss de-dollarization measures. However, the International Monetary Fund (IMF) does not see a “rapid shift” in USD reserves despite the rising de-dollarization trend.
Do you think the Chinese yuan will replace the U.S. dollar as the world’s reserve currency? Let us know in the comments section below.
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