World Desk, AnyTV, Hong Kong
Published by: Harendra Chaudhary
Updated Mon, 07 Mar 2022 05:59 PM IST
Summary
Now the eyes of most experts are on China. One possibility has been raised that together with Russia, China will create a new system of payment in bilateral trade. In this, transactions will be done in mutual currencies without resorting to dollars. India has already made successful experiments in this direction. When the US imposed sanctions on Iran, India bought oil from Iran by paying in rupees.
Russia has been subjected to the toughest economic sanctions ever since the invasion of Ukraine. Because of this, its financial ties with Western countries have almost completely broken. According to experts, the condition of Russia in this matter has now become like that of North Korea. Due to this, the possibility of default of Russian companies (not being able to repay the loan on time) has become very deep. But the decision that has drawn the most attention from Western countries is the sanctions imposed on Russia’s central bank. America has decided to confiscate the deposits of Bank of Russia.
But the US move has sparked debate over the decades-long practice of keeping its money in dollars. Especially in this matter, experts are watching the stand of China, which has more than two trillion dollars of US currency. Experts have raised the question whether China and many such countries will now look for any other option in view of America’s recent move and whether such options exist in the world?
Confrontation with America costly
Former Reserve Bank of India Governor D Subbarao has said in an interview that the management of foreign exchange reserves is driven by the safety of funds, availability of cash, and interest earned on the money in the reserves. Currently, currencies such as the dollar, euro and yen meet these criteria. He said that from the action taken on Russia, the governments of different countries will take a lesson that US sanctions have a bad effect, that is, taking confrontation with America is costly.
Meanwhile, some other experts are now advising that central banks should invest their money in things like crude oil and gold instead of investing in dollars. But there is an opinion that Central Bank officials do not have the skills to make such business investments. They are only knowledgeable in financial management. Therefore, for the time being, many countries will withdraw money from the dollar and invest it in some other commodity, it is less likely.
In this regard, now the eyes of most experts are on China. One possibility has been raised that together with Russia, China will create a new system of payment in bilateral trade. In this, transactions will be done in mutual currencies without resorting to dollars. India has already made successful experiments in this direction. When the US imposed sanctions on Iran, India bought oil from Iran by paying in rupees. Now it is expected that China will probably try to develop its currency Yuan as a currency of international transaction.
Dr. Subbarao also said in an interview to TV channel CNBC- ‘New options may emerge in the form of unit or means of payment.’ However, he said that as far as the store value is concerned, there is no match for the dollar as of now. But other experts say that after the widespread use of state-owned digital currency, the world may find an effective alternative to payment without the dollar.
Expansion
Russia has been subjected to the toughest economic sanctions ever since the invasion of Ukraine. Because of this, its financial ties with Western countries have almost completely broken. According to experts, the condition of Russia in this matter has now become like that of North Korea. Due to this, the possibility of default of Russian companies (not being able to repay the loan on time) has become very deep. But the decision that has drawn the most attention from Western countries is the sanctions imposed on Russia’s central bank. America has decided to confiscate the deposits of Bank of Russia.
But the US move has sparked debate over the decades-long practice of keeping its money in dollars. Especially in this matter, experts are watching the stand of China, which has more than two trillion dollars of US currency. Experts have raised the question whether China and many such countries will now look for any other option in view of America’s recent move and whether such options exist in the world?
Confrontation with America costly
Former Reserve Bank of India Governor D Subbarao has said in an interview that the management of foreign exchange reserves is driven by the safety of funds, availability of cash, and interest earned on the money in the reserves. Currently, currencies such as the dollar, euro and yen meet these criteria. He said that from the action taken on Russia, the governments of different countries will take a lesson that US sanctions have a bad effect, that is, taking confrontation with America is costly.
Meanwhile, some other experts are now advising that central banks should invest their money in things like crude oil and gold instead of investing in dollars. But there is an opinion that Central Bank officials do not have the skills to make such business investments. They are only knowledgeable in financial management. Therefore, for the time being, many countries will withdraw money from the dollar and invest it in some other commodity, it is less likely.
In this regard, now the eyes of most experts are on China. One possibility has been raised that together with Russia, China will create a new system of payment in bilateral trade. In this, transactions will be done in mutual currencies without resorting to dollars. India has already made successful experiments in this direction. When the US imposed sanctions on Iran, India bought oil from Iran by paying in rupees. Now it is expected that China will probably try to develop its currency Yuan as a currency of international transaction.
Dr. Subbarao also said in an interview to TV channel CNBC- ‘New options may emerge in the form of unit or means of payment.’ However, he said that as far as the store value is concerned, there is no match for the dollar as of now. But other experts say that after the widespread use of state-owned digital currency, the world may find an effective alternative to payment without the dollar.