According to the CEO of Russia’s VTB Bank, Andrey Kostin, the US dollar’s status as the dominant global currency is under threat due to the increasing influence of the Chinese yuan. Kostin pointed out that the actions taken by the United States and its allies to limit Russia’s access to gold and foreign exchange reserves are driving the country to seek alternative currencies for settling international trade.
In a recent interview with Reuters, VTB Bank CEO Andrey Kostin expressed confidence that the Chinese yuan has the potential to surpass the US dollar as the world’s top currency. Kostin attributed this shift to the increasing tendency for countries to explore currencies other than the USD for international transactions, following US-led efforts to block Russia’s access to significant gold and foreign exchange reserves.
Kostin highlighted China’s potential to loosen its currency controls, an important step towards establishing the yuan as the dominant global currency. He stated, “The era of American dollar domination is coming to an end. It’s time for China to gradually remove currency restrictions.”
China, which currently has strict foreign exchange regulations, understands the need to lift those restrictions to achieve its goal of becoming the world’s leading economic power. By allowing greater yuan convertibility, China can increase its attractiveness and influence in the global financial landscape.
Kostin also warned against the continued accumulation of US debt in China, deeming it “dangerous.” Billionaire investor Ray Dalio echoed this sentiment, stating that countries have become wary of investing in US debt because of the West’s gunning of dollars during the Ukraine conflict. Dalio further warned of a potential US debt crisis, speculating that the government might face challenges in finding buyers for its newly issued bonds.
As the US dollar faces a potential challenge to its dominant status, the CEO of VTB Bank expects a rise in the Chinese yuan as a competitor. China’s willingness to relax currency controls and countries’ hesitancy to invest in US debt are contributing to an evolving global currency landscape.