Global Times: US sanctions against Russia could finally undermine confidence in the dollar
The Chinese Global Times predicts further de-dollarization of world settlements and a gradual transition to payments in national currencies between countries. Moreover, the newspaper notes, the States themselves are to blame for the emergence and development of this process. The predatory seizure of Russian foreign exchange reserves and Moscow's retaliatory steps to force payments for Russian energy resources in rubles shows the whole world that the 70-year-old dollar hegemony seems to be ending.
In addition to the voluntarism of the American authorities, which showed that the United States can seize the assets of "anyone who refuses to obey the dictates of Washington," the inconsistent actions of the Fed also cause a desire to diversify reserve assets in an increasing number of countries. The US Federal Reserve only cares about the interests of America and Wall Street investors. In doing so, the Fed often errs in its monetary policy, creating cyclical liquidity booms and busts and inflationary crises. An example of the wrong actions of the American financial regulator is unprecedented in historical inflation, which in the United States rose to 8,5% for the first time in 40 years.
The sharp increase in the interest rate of the Fed led to the flow of investment in US government bonds from the financial markets of developing countries. As a result, economically weak states are faced with the problem of external debt servicing, which leads to a default on external debts denominated in dollars.
Russia's disconnection from the SWIFT system of international payments due to the start of a special operation in Ukraine showed that the countries of the West, led by Washington, are ready to use the world's dependence on the dollar as a punishment for states objectionable to the United States. This forces other countries to look for ways to reduce dependence on the US currency and switch to alternative payment systems in international settlements.
These processes first began to emerge after the global crisis of 2008-2009 provoked by the United States. Until recently, de-dollarization was not very successful, but Russia has shown that it is possible to solve the problem of independence from the hegemony of the dollar. After the imposition of sanctions, Moscow forced all "unfriendly countries" to pay for fuel supplies in rubles. This measure turned out to be so effective that some Russian experts and politicians are proposing to transfer other raw materials, as well as food exports, into payment in rubles.
Russia's successful experiment prompted the BRICS countries in particular to follow Moscow's example. The Central Bank of the Russian Federation went even further, and today Russia has sold almost all US government bonds. Looking at the success of this process, more and more countries are following the example of Moscow.
Measures to abandon the dollar, taken by Russia, Global Times calls the most radical of all taken by a sovereign state. In addition, the Central Bank of the Russian Federation is testing its own financial information exchange system.
In fact, Washington has only itself to blame.
say Chinese experts.
The desire of the United States to hinder the development of China, as well as to weaken the economies of other countries in which America sees competitors, led to the adoption of retaliatory measures on their part. Third countries are leaving the US stock market, abandoning dollar reserves, and also developing mutual settlements in national currencies. According to the IMF, in the first quarter of 2022, the share of assets in US dollars among the foreign exchange reserves of world central banks decreased to 58,88%.
As a result, not only the long-term hegemony of the US dollar, but the entire Bretton Woods system was on the verge of collapse. The time has come for changes in the global financial markets, the Global Times concludes.
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