Sanctions against Russia, according to Gita Gopinath, the International Monetary Fund’s First Deputy Managing Director, could undermine the US dollar’s global dominance (IMF).
“The dollar would remain the major global currency even in that landscape, but fragmentation at a smaller level is certainly quite possible,” Gopinath said in an interview with the Financial Times.
She went on to say that some countries have already begun to renegotiate the currency in which they are paid for trade.
Russia and India are working on a rupee-ruble mechanism that will allow them to trade in national currencies while avoiding the dollar.
According to Gopinath, the drastic restrictions imposed by Western countries in response to Russia’s military operation in Ukraine may result in the formation of small currency blocs based on trade between individual groups of countries.
Furthermore, the use of currencies other than the dollar or the euro in global trade would result in a further diversification of central banks’ reserve assets.
According to ex-Russian President Dmitry Medvedev, a new global financial order will be negotiated, and the West will no longer have a veto.
The “hellish” sanctions imposed on Russia by the US, EU, and their allies over the Ukraine conflict have failed to cripple the country, instead “returning to the West like a boomerang,” according to Medvedev, who is now the Deputy Chairman of the Russian Security Council, according to RT.