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Risk of dollar ban stirs fears in Russian society

November 20, 2013, 18:08 UTC+3 Alexandrova Lyudmila

MOSCOW, November 20 (Itar-Tass) - Even a hypothetical threat of being stripped of the right to use dollars as a means to stash cash and pay for expensive purchases (very many Russians developed this habit promptly after the collapse of the USSR) has provoked a prompt and emotional response from society. This blatantly populist initiative put forward by a legislator from Vladimir Zhirinovsky’s political party LDPR has no chances to succeed, yet many officials have had to publicly deny the rumored plans. Experts say anti-American sentiment so widely spread in certain groups of society co-exists with people’s affection for greenbacks based on distrust towards the national currency.

A former candidate in Moscow's mayoral election, Mikhail Degtyaryov, suggested US dollars be prohibited from circulation in Russia because of the financial instability in the US. He submitted a corresponding bill to the State Duma last week.

If the bill were approved, Russians would have to close dollar accounts in Russia and exchange cash for other currencies. Otherwise, banks would have to sell up dollar deposits according to last year's average exchange rate. The project stipulated that restrictions would affect only the dollar, while the use of the euros, pound sterling, renminbi, and other currencies would remain unchanged.

The explanatory note says free dollar circulation impedes the popularity of the ruble and is an obstacle in its way to becoming a world reserve currency. The author finds the mere fact that many Russians prefer to save money wholly or partially in dollars a peril for the country: “If the US state debt continues to increase at the current pace, the financial system is going to collapse in 2017.”

The legislator as well as the whole party LDPR is fabulous for eccentric initiatives. Last July he proposed a monthly paid vacation for women for the time of their period.

It is already obvious Degtyaryov’s latest initiative is doomed to failure. The State Duma’s speaker, Sergey Naryshkin said he would not support the idea. The head of the committee for economic policy, Igor Rudensky (United Russia), described it as “utter nonsense”. The financial markets committee assessed the project as an act of “dangerous populism”.

However, some state officials had to carry the can for the notorious bill. Finance Minister Anton Siluanov assured the people they would not be deprived of dollars.

“The US dollar as well as the euro is one of the stable currencies, in which Russia stores its gold and currency reserves. Therefore, I do not think it makes any sense to impose restrictions on the use of dollars for individuals, and I am sure the State Duma will not support the idea,” he said.

The Civic Chamber has also opposed the proposal. “It surely has no chances to become law. Its sole purpose is to provoke public clamour,” PC Deputy Secretary Vladislav Grib said.

Almost all experts were as skeptical about the bill, noting the inconsistency of Degtyaryov’s arguments. The actions proposed would not only fail to bring the ruble closer to the reserve currency status, but also lead to an economic decline.

“The argument to the effect canceling dollars in Russia would help the ruble reach the status of a reserve currency is absolutely uncompelling,” RBC Daily quotes the head of market analysis at Otkritie Brokerage House, Konstantin Bushuev, as saying. “For the ruble to acquire this status it needs a solid foundation represented by a strong and widely diversified economy little reliant on oil prices.”

Meanwhile, Russia was not excessively dependent on the dollar now, Bushuev added. All transactions such as the selling of goods and services, paying labor compensations, loans, deposits, and transactions with financial assets are performed in rubles. The average Russian saves only a trifle of deposits in a foreign currency for a rainy day.

The director of Alpari’s research department, Alexander Razuvaev, quoted by the weekly Argumenty I Fakty, believes the Party LDPR “is stuck in the 90s”. As for the present state of the ruble, the expert finds it stable.

“If we have a look at the chart of ruble growth, we can see it has been about the same for over ten years. If adjusted for inflation, the ruble has even been strengthening,” Razuvaev said.

The liberal press has mocked the initiative, saying it reflected the ...anti-American trend in the Russian society.

A commentator on the Ekho Moskvy (Echo of Moscow) radio station, Anton Orekh, is sure “Degtyaryov’s least interest is in the economy, the people’ welfare or safety of their deposits,” as, like most deputies, he “is allergic to the three-letter word - the USA”. Orekh urged legislators to “first close their dollar accounts in America and sell their apartments and plots of land for rubles.”

“After the reset in U.S.-Russian relations came to its sad ending, the US regained its role of Russia’s number one imaginary foe,” the Moskovsky Komsomolets daily says. “Some people in the bodies of power stubbornly fuel people’s dislike of the overseas country. Meanwhile, they continue to keep stolen money in the much-criticized currency, actively buying up U.S. real estate and never missing a chance to shake hands with any American politician of some importance.


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