MOSCOW, August 13. /TASS/. It is reasonable for Russia to keep reducing the dollar component of its international currency reserves in a move to avoid problems for its economy due to the economic situation in the US, the Russian Foreign Ministry’s Information and Press Department told TASS.
"It is reasonable to continue efforts on further reduction of the dollar component in its international reserves. Meanwhile, it is possible to replace the US dollar with other currencies - both national and regional, and in the future, possibly, with certain digital assets," the ministry said.
The 50th anniversary of the abolishment of the Bretton Woods system is reason to think about the evolution of monetary policies of the world’s central banks and "contradictory maintenance of the dominating position of the dollar secured by nothing," the diplomatic mission noted. "Some signs of today’s situation in the US economy resemble the 1970s. The country’s GDP contracted by 3.5% in 2020, which is the biggest contraction since 1946. The trade balance deficit increased to $678.7 bln (+17.7%), surpassing the previous high of the 2008 crisis year. It is safe to speak about a 60-fold drop in purchasing power of the American currency, which was coupled with an even larger-scale increase in public debt," the ministry added.
Due to this, the ministry emphasized that Washington’s continual and uncontrollable printing of dollars is a global problem. However, one should not expect Washington to declare default for the sake of zeroing out debts. "There will definitely be consequences of the course chosen by the Americans: their currency will keep devaluing, whereas the quality of life of its citizens will most likely fall. However, this is once again the problem of those keeping their savings (and national reserves) in dollars," the ministry said.
Relevance of independent payment systems
Moscow considers it obviously necessary to revise the global practice of injecting cash liquidity in US treasury bonds "at miserable interest rates." "In June, the rate on ten-year US bonds roughly totaled 1.5%, whereas inflation in the country accelerated in annual terms to 5.4%, which is equal to depreciation of investors’ savings by 3.9% - one of the worst results among the world’s developed economies. Meanwhile Russia continues actively reducing investments in American securities: in ten years respective [Russian] investments went down 45-fold amounting to less than $4 bln now," the Foreign Ministry explained.
Moreover, Moscow considers the withdrawal from the dollar peg in state-to-state settlements as a balanced response to declining predictability of the US’ economic policy, due to which the promotion of payment systems independent of Washington are relevant, the ministry noted. "There are no solutions, which is why the necessity arises to deeply revise the established patterns of cooperation between countries and commercial structures. We are confident that an increasing number of countries will reach similar conclusions and confirm the relevance of this line in the near future," it added.