Sanctions against Russia could chip away at the global dominance of the US dollar, according to Gita Gopinath, the first deputy managing director of the International Monetary Fund.
“The dollar would remain the major global currency even in that landscape but fragmentation at a smaller level is certainly quite possible,” Gopinath said in an interview with the Financial Times on Wednesday.
She added that some countries are already renegotiating the currency in which they are paid for trade. Russia and India are currently preparing a rupee-ruble mechanism, replacing SWIFT. it would allow them to trade in national currencies while evading the dollar.
According to Gopinath, the radical restrictive measures introduced by Western countries amid Russia’s military operation in Ukraine could lead to the emergence of small currency blocs based on trade between individual groups of countries. Furthermore, the use of currencies other than the dollar or the euro in global trade would lead to the further diversification of the reserve assets held by national central banks.
Biden said recently that we are looking at a long, protracted war in Ukraine. The longer this goes on, the worse it gets for the US dollar and the energy crisis in the West.
APRIL FOOL’S DAY, WHEN THE RUSSIANS CUT OFF GAS TO EUROPE
As reported yesterday, Russian President Vladimir Putin has greenlighted ruble gas payments for buyers from countries that placed sanctions on Russia in connection with Ukraine.
Putin signed a decree on Thursday demanding that these buyers open accounts in Russian banks to facilitate the payments.
The measure takes effect from April 1.
“If unfriendly countries do not pay in rubles starting from April 1, we will consider this a default on gas contracts, in which case the existing contracts will be scrapped,” the president said.
The ‘unfriendly’ states Putin referred to are the US, UK, Canada, Australia, Japan, Taiwan, South Korea, Switzerland, the 27 nations of the European Union, and a number of smaller countries.
INDIA IS THE FUTURE AND THEY MIGHT JOIN RUSSIA’S VERSION OF SWIFT
The Indian government will make a decision next week about Moscow’s proposal to turn to the Russian payment system. It allows direct rupee-ruble transfers in bilateral trade.
The mechanism avoids trade in dollars and allows India to bypass Western sanctions.
The scheme involves rupee-ruble-denominated payments via Russia’s messaging system, SPFS. The final decision is expected to come after a two-day visit of Russian Foreign Minister Sergey Lavrov to India. That’s according to Bloomberg.
Under the proposal, rubles will reportedly be deposited into an Indian bank. They will be converted into rupees. And the same system will work in reverse. Russia also wants India to link its Unified Payments Interface with their MIR payments system for seamless use of cards issued by banks of both countries after Visa and Mastercard suspended operations in Russia.
India and China would then be solid trading partners. “Isolated” Russia isn’t that isolated. The ruble is also not crashing as Biden promised.
The Biden administration also seemed to believe China might support the US or at least not counter the US. Even Bill O’Reilly suggested it last night on his podcast. The notion is not even in the realm of reality.
CHINA WILL RESTRICT VISAS OF SOME US OFFICIALS
Currently, China has decided to restrict visas for a number of US officials. This is in response to similar measures introduced by Washington earlier this month over alleged human rights abuses.
“The Chinese side decided to impose retaliatory visa restrictions on certain US officials who spread lies on the issue of human rights, imposed sanctions against China, and harmed China’s interests,” stated Chinese Foreign Ministry spokesperson Wang Wenbin on Thursday.
“The spokesperson claims that the US used the false pretext of human rights issues to interfere in the internal affairs of China, discredit Beijing, and put pressure on Chinese officials.
Wang stated that such actions are a serious violation of the basic principles of international law and international relations.
We don’t know who it affects yet. But it will be those who allegedly invented “lies” on the issue of human rights.
The US just imposed visa restrictions on China and this is the response.
Blinken is most assuredly on the list.
The US needs to find a way to get along with these people.