The utilization of the US dollar as a weapon has prompted many nations to seek alternative payment mechanisms, according to a top banker. At the ongoing Russia-Africa summit, Andrey Kostin, CEO of Russia’s second-largest bank VTB, discussed the topic of alternative payment mechanisms in mutual trade. Speaking to journalists in St. Petersburg, Kostin emphasized that the weaponization of the US dollar has led nations to gradually move away from using it in trade.
Kostin expressed that structural changes are inevitable, and African countries have already taken action in response to the weaponization of the US currency. These nations have started creating their own systems of information exchange and settlements in their national currencies. Kostin believes this trend is promising, stating, “A share of trade settlements in alternative currencies will continue to increase.”
The shift towards alternative currencies in mutual trade has been observed between Russia and its trade partners among developing nations, including Brazil, China, India, and South Africa — the members of the BRICS. This move was motivated by the impact of sanctions, which effectively disconnected Moscow from the Western financial system. More and more countries are expressing their support for this trend.
Recent statements by President Putin highlight the progress made in switching to alternative currencies. He revealed that over 80% of transactions between Moscow and its largest trading partner, Beijing, are settled in rubles and yuan. This exemplifies the successful integration of national currencies in trade.
Russia has also announced its plans to initiate negotiations regarding the use of national currencies with countries in the Association of Southeast Asian Nations (ASEAN). This includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. These discussions aim to further expand the use of alternative currencies in trade and reduce reliance on the US dollar.
This growing trend reflects the mindset of nations seeking to lessen vulnerability to the weaponization of US currency. By diversifying their payment mechanisms, countries aim to decrease the influence and control that the US has over global trade. As more countries shift towards alternative currencies, the significance of the US dollar in international transactions could potentially diminish.
It is important to note that while alternative currencies are gaining momentum, the US dollar still holds significant weight in global trade. However, the increasing utilization of alternatives indicates a changing landscape in international financial interactions.
In light of the ongoing developments, observers continue to monitor the progress of alternative payment mechanisms and their impact on the global economy. The Russia-Africa summit serves as a platform for discussions and initiatives that seek to reshape mutual trade and reduce reliance on the US dollar. As more countries adopt alternative payment mechanisms, it remains to be seen how this shift will shape the dynamics of international trade in the future.
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