According to Andrei Kostin - CEO of Russia's second largest bank VTB, the yuan is becoming popular and many countries also pay in currencies other than USD and euro.
In an interview with Reuters , Andrei Kostin said the war in Ukraine is creating major changes to the world economy , reducing globalization in the context of China gradually becoming a leading economic power.
He also said that the US and the European Union (EU) would suffer losses from freezing hundreds of billions of dollars of Russian government assets abroad, as more and more countries are paying in currencies other than the US dollar and euro.
"The long history of the US dollar's dominance is coming to an end. China is also gradually removing its currency restrictions. They understand that they cannot become the world's number one economic power if the yuan remains a non-convertible currency," Kostin said. He also believes that China will be in a dangerous situation if it continues to invest in US government bonds.
VTB CEO Andrei Kostin at the St. Petersburg International Economic Forum 2022. Photo: Reuters
The US dollar has dominated the world since the early 20th century, when it overtook the British pound as the world’s reserve currency. However, JPMorgan said earlier this month that signs of de-dollarization in the global economy have emerged. The war in Ukraine and the uncertainty surrounding the US debt ceiling are making the dollar’s position shaky.
Meanwhile, China's economy has grown strongly over the past 40 years. Kostin said VTB is also negotiating the use of yuan in payments with third countries.
Kostin is a former diplomat who worked in the UK and Australia. He entered the banking sector in the early 1990s. Today, Kostin is one of the most experienced and powerful bankers in Russia.
Kostin was sanctioned by the US in 2018. After the war in Ukraine, he was further sanctioned by the EU and the UK for being "close to Russian President Vladimir Putin".
He said the sanctions were unfair and that the political move would also be “counterproductive” to the West. Kostin said he had read many articles about drug money laundering through major Western banks.
Kostin said VTB expects to make a profit of 400 billion rubles ($4.9 billion) this year. It posted a record profit in the first five months of the year, after a record loss last year.
He also insisted that Russia’s economy would not collapse because of Western sanctions. In April, the International Monetary Fund (IMF) raised its forecast for Russian GDP growth this year to 0.7%, up from 0.3% previously. However, the pace for 2024 was cut from 2.1% to 1.3%.
"Sanctions are ugly. We suffer from them, of course. But the economy has adapted. We also expect them to tighten sanctions further. But when one door closes, another opens," he said.
Ha Thu (according to Reuters)
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