Andrei Kostin, the CEO of state-controlled VTB, Russia’s second-largest bank, informed Reuters that the Chinese yuan’s rise and the world’s realization of the consequences of the West’s failed attempt to weaken Russia over Ukraine were signaling the imminent end of the U.S. dollar’s dominance. Kostin emphasized that the ongoing crisis was bringing about significant changes to the global economy, undermining globalization precisely as China was assuming the role of a leading global economic power.
When asked about his perspective on whether the world was currently experiencing a new Cold War, Andrei Kostin stated that it had escalated into a “hot war” that posed a greater danger than the Cold War.
Russian sovereign assets
The United States and the European Union, he said, would lose from moves to freeze hundreds of billions of dollars of Russian sovereign assets as many countries were moving to settling payments outside the U.S. currency and the euro while China was moving towards a removal of currency restrictions.
“The long historical era of the dominance of the American dollar is coming to an end,” Kostin, 66, told Reuters on the 59th floor of the gleaming VTB skyscraper overlooking southern Moscow. “I think that the time has come when China will gradually remove currency restrictions.”
“China understands that they will not become world economic power Number 1 if they keep their yuan as a non-convertible currency,” Kostin said, adding that it was dangerous for China to keep reserves invested in U.S. sovereign bonds.
The U.S. dollar has been dominant since the early 20th Century when it overtook the pound sterling as the global reserve currency, though JPMorgan said this month that signs of de-dollarisation are unfolding in the global economy.
China’s spectacular economic rise over the past 40 years, the fallout from the war in Ukraine and wrangling over the U.S. debt ceiling have put the dollar’s status under fresh scrutiny.