Russia’s Long-Term Strategy: Time to Start Weaning the World Off the Dollar Reserve Currency
Russia, China, the EU — more and more countries in the world are thinking of reducing the role of the dollar in foreign trade and switching to other currencies. What will happen to the ruble and how the process of de-dollarization will take place in our country first Deputy Prime Minister and Minister of Finance Anton Siluanov said in an exclusive interview.
— Hello, Nailya. Why are we looking for a replacement for the dollar?
— Igor, that is related to the policy of the American authorities. Today, 40% of world trade is made in dollars. Taking advantage of this, the USA has unleashed a trade war against China. Sanctions have been imposed on many Russian companies and businessmen. Our country is threatened to tighten these restrictions in the near future. Therefore, we are trying to protect ourselves in advance.
Anton Siluanov, Minister of Finance: «In order to ensure stability in settlements, we are starting and are already taking steps to, firstly, switch to settlements in national currencies. We believe that even in those contracts concluded in dollars with our partners, which are the countries of the Eurasian Union, the CIS countries, and even our European partners, we must more and more switch to settlements in rubles, euros, and national currencies».
Today, the dollar accounts for almost 70% of our exports and 36% of imports. If we have a look at all the currencies that Russia uses in foreign trade, in the second place is the euro with 21%, almost as much as the ruble's share, 20%. The share of other currencies, including the yuan, is still small. According to Anton Siluanov, the government will encourage exporters to switch to other currencies.
Anton Siluanov: «We will now take measures to stimulate the settlements of our partners in rubles. We will make tax preferences. We will speak about a more accelerated procedure for the return of the settlements of currency earnings, the return of VAT on export deliveries. We will create incentives to switch to settlements in national currencies. I think that this is an absolutely right decision».
The Finance Ministry is sure both China and the EU are also now interested in using other currencies in order to mitigate the actions of the American administration. This summer, China reduced investments in the US national debt by $7,7 billion. Anton Siluanov says decisions on de-dollarization of our economy will be made this year. next year, Russia will sell oil and gas for rubles, euros, yuan, and other currencies other than the dollar.
— In other words, Donald Trump has something to think over. Nailya, shall the Russians be concerned? After all, if our country will use dollar less, what will happen to foreign currency deposits?
— Igor, Anton Siluanov assures we shouldn't fret.
Anton Siluanov: «We are not talking about the dollars that are stored on bank accounts. Citizens who have such currency accounts shouldn't be worried about all our proposals on settlements under foreign trade contracts since no one is going to exclude the dollar circulation, no one is going to forcibly change dollar savings to ruble ones or some other. This policy has been and will continue to be maintained».
— What will happen to the ruble?
— Igor, in the coming years, the Ministry of Finance expects the ruble exchange rate to be around 62 rubles per dollar, and in 17 years it may exceed 73 rubles. In the near future, the dynamics of our currency will depend on external factors.
Anton Siluanov: «In 2017, and in 2018, we fully ensured the stability of the ruble exchange rate to external factors related to oil prices. But to ensure the same, 100% stability of the exchange rate to external influences related to sanctions… Well, it's difficult to predict such things. In general, we have the understanding of how we shall respond to the current situation. I hope that the actions of the government and the Central Bank will contribute to the stability of the exchange rate».
— Thank you. This was my colleague Nailya Asker-zade.