The International Monetary Fund’s (IMF) executive director for Russia says the West’s decision to lock out certain countries from the global payments system is forcing many nations to look for a substitute currency.
Aleksei Mozhin says the world has witnessed how the US and its allies used economic and financial sanctions to penalize Russia for its war in Ukraine, according to a new report from Sputnik.
According to the IMF official, the use of sanctions as a stick is creating a more divided global economy.
“The blatant use by the West as a weapon of international trade, finance, as well as the dollar and the euro itself, makes the fragmentation of the world economy not only inevitable, but also irreversible.”
In March 2022, the West imposed foreign sanctions that froze about $300 billion worth of Russian reserves. The sanctions also cut off Russian banks from SWIFT, a cross-border payment system dominated by the dollar and the euro.
Mozhin says that the weaponization of the dollar is pushing a number of nations to bypass the American currency when settling international trades.
“The Americans themselves have created a situation where the search for alternatives to the dollar has inevitably started. And now we see how it’s happening… We see that Iranians, Brazilians, and Saudis are already switching to trade in yuan not only with China, but also with third-party countries.”
In May, reports surfaced that China has inked deals with dozens of countries to settle $582.3 billion worth of global trades in yuan in an effort to circumvent the dollar.
Earlier this month, Andrey Kostin, the chief executive of Russia’s second-largest bank, said that the yuan could end up dethroning the dollar as China appears to be on the path of removing its strict currency restrictions.
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