The US-led Western sanctions campaign against Russia threatens to chip away at the US dollar’s dominance as the world’s reserve currency, a top IMF official told The Financial Times.
Gita Gopinath, the IMF’s first deputy managing director, said the sweeping sanctions against Russia will lead to more countries making transactions in other currencies.
“The dollar would remain the major global currency even in that landscape but fragmentation at a smaller level is certainly quite possible,” she said. “We are already seeing that with some countries renegotiating the currency in which they get paid for trade.”
Since the sanctions campaign began, Russian President Vladimir Putin has taken steps to increase trade with the ruble. He said that Russia will stop selling gas to “unfriendly” nations unless they pay in the Russian currency. Moscow has also proposed to India to make deals in ruble-rupee-denominated payments.