VTB Bank CEO Andrey Kostin.
Olga Maltseva/AFP/Getty Images
The CEO of Russia’s VTB Bank said the US dollar’s dominance is ending, but the yuan could be on the rise.
He told Reuters Beijing could loosen currency restrictions.
VTB is discussing Chinese yuan settlements with non-China countries.
A top Russian banker is predicting the greenback’s demise — and he thinks China’s yuan is gaining prominence.
“The long historical era of the dominance of the American dollar is coming to an end,” Andrei Kostin, the CEO of state-controlled VTB, told Reuters in an interview published on June 9
Kostin also thinks the yuan could become more widely used as China could loosen its currency restrictions over time.
He told Reuters: “China understands that they will not become world economic power Number 1 if they keep their yuan as a non-convertible currency.”
His comments come as VTB, Russia’s second-largest bank by assets, is discussing settling trade transactions using the yuan with countries outside China.
The bank has been sanctioned by the US and the EU, forcing it to seek alternative currencies for money transfers. Settling trade payments using the currencies of countries that haven’t sanctioned Russia is one way those doing business with Russia can get around restrictions.
Kostin’s assessment of the US dollar’s clout and the rise of the yuan came amid an intense debate over de-dollarization that has raged on for the past year. The debate is fanned by fears that Washington is weaponizing the US dollar-denominated global financial system against Russia over the Ukraine war.
The concerns are prompting countries globally to line up backup currencies for trade, as sanctions against Russia over its invasion of Ukraine have led to some prominent world leaders and business figures sounding a warning over how much power Washington wields.
“We have already entered into a hot war,” said Kostin about the war in Ukraine, per Reuters. “It is not cold when there are so many Western weapons and a lot of Western services and military advisers involved. The situation is worse than in the Cold War, it is very difficult and alarming.”
Despite the hard-hitting sanctions against Russia and its economy, Kostin said the country will adapt.
VTB posted a loss of $7.7 billion in 2022 due to Western sanctions against Russia. But the bank expects to post record profits in 2023 after acquiring a rival Russian bank, Reuters reported in April.
VTB did not immediately respond to a request for comment from Insider sent outside regular business hours.