Chinese Yuan To Overtake USD In Global Dominance, Says Russian Second-Largest Bank’s CEO

The CEO of the Russian second-largest bank (VTB Bank), Andrey Kostin, says the US dollar has approached the end of its reign as the dominant global currency. He maintained that the Chinese yuan is gradually taking over worldwide.

Andrey Kostin disclosed his belief during an interview with Reuters. The VTB Bank CEO stated the shift from USD to CNY is occurring as the US and its allies, like European Union, are obstructing Russia from some international privileges by trying to freeze the latter’s assets.

In his term, Kostin thinks the world is currently in a ‘hot war’ which is more destructive than the Cold War.

China Working Toward The Removal Of Currency Restrictions

According to Kostin, the US and the European Union are limiting Russia from accessing hundreds of billions of dollars’ worth of gold and other foreign exchange reserves. Such moves are pushing other nations into using alternative currencies while making international payments and trades.

Further, Kostin explained that the Chinese government is making more efforts to loosen extensive currency controls on its Chinese Yuan Renminbi. This will help to level out some restrictions on the yuan, allowing it to outplay the dollar in international markets very soon.

Kostin said: “China understands that they will not become world economic power number one if they keep their yuan as a non-convertible currency.”

In China, there are current restrictions on companies and individuals from freely transferring money both within and outside the country. 

The authorities demand that they comply with certain strict foreign exchange laws before they can do so. The VTB Bank CEO noted that it would be devastating for China to keep holding and accumulating US debt.

Is The US Dollar Stumbling?

In the early 20th Century, the US dollar became the world’s dominant currency after overtaking the pound sterling (GPD) as the global reserve currency.

Some strategists at the US biggest bank, JPMorgan, Meera Chandan, and Octavia Popescu, reported gradual signs of de-dollarisation in the global economy. 

The strategists cited some contributory factors such as the increasing US interest rates, sanctions on Russia that cut it off from the global banking system, and others.

Also, data from the International Monetary Fund (IMF) on the Currency Composition of Official Foreign Exchange Reserves (COFER) revealed drastic changes for the US dollar. It highlighted that the dollar share hit a 20-year low of 58% in Q4 2022.

A report from Bloomberg on June 11 disclosed the billionaire Ray Dalio stated that some countries are holding back from further commitment to the United States. 

According to Dalio, many nations are skeptical about investing in US debt following the way the West used the dollar to penalize Russia over its war with Ukraine.