One of the strongest bankers in Moscow believes that the end of U.S. dollar dominance is near with the rise of the Chinese yuan, noting that the rest of the world sees the risk of the West's failed attempts to subdue Russia following its invasion of Ukraine.
Andrei Kostin, CEO of VTB Bank, Russia's second-largest state-controlled bank, stated in an interview with Reuters that the crisis has signaled sweeping changes in the global economy and is undermining globalization as China takes the lead in global economic power.
When asked whether he believes the world is entering a new Cold War, Kostin mentioned that it has become a “hot war” that is more dangerous than the Cold War.
He pointed out that the United States and the European Union will suffer from moves to freeze hundreds of billions of dollars of Russian sovereign assets as many countries are turning to settle payments in currencies other than the dollar and the euro, while China is moving towards lifting currency restrictions.
He affirmed that "the long historical era of U.S. dollar dominance is nearing its end," adding, "I believe it is time for China to gradually lift currency restrictions."
He commented, "China realizes that it will not become the world's number one economic power if it retains the yuan as a non-convertible currency," adding that it is dangerous for China to continue investing in reserves of U.S. sovereign bonds.
Kostin revealed that VTB Bank is considering using the yuan for settlements with third countries.
The U.S. dollar has been dominant since the early 20th century when it surpassed the British pound as the global reserve currency, although JPMorgan stated this month that signs of the dollar's decline are emerging in the global economy.
