Russia’s recent moves, including the establishment of two state-linked cryptocurrency exchanges and the introduction of a new stablecoin pegged to the Chinese yuan, are significant steps in the process of moving away from the US dollar in global trade. Russia’s move is a response to US sanctions, which have prompted the country to seek alternative payment systems to support its economy.
Policies to circumvent Western sanctions
By pegging the new stablecoin to the Chinese yuan at a 1:1 ratio, Russia aims to create a stable, non-volatile currency that can be used reliably in international transactions. This yuan-backed stablecoin is expected to play a crucial role in helping Russia bypass US sanctions and reduce its dependence on the US dollar. The introduction of this stablecoin also aligns with the broader strategy of the BRICS (Brazil, Russia, India, China, South Africa) to de-dollarise global trade and promote the use of local currencies in international deals. The establishment of these cryptocurrency exchanges in Moscow and St. Petersburg is a clear indication of Russia’s commitment to this strategy. By integrating digital payments for trade settlements through these platforms, Russia aims not only to insulate its economy from the effects of sanctions, but also to strengthen the use of the Chinese yuan in global trade, particularly within the BRICS context.
A new world economic system
This initiative is part of a broader trend among the BRICS countries to challenge the dominance of the US dollar in international trade. The successful implementation of this plan could lead to a significant reduction in the role of the US dollar in global trade, particularly among the BRICS and other developing countries, which have already started to conduct some of their trade in Chinese yuan.
In general, these moves underline the geopolitical and economic changes taking place as countries such as Russia and China seek to reshape the global financial system in ways that reduce the influence of the US dollar. This could have far-reaching implications for global trade and economic power dynamics in the years to come.
