Financial sanctions imposed on Russia over its invasion of Ukraine may result in reduced dominance of the U.S.
Russia’s decision to invade Ukraine has been met with waves of Western sanctions that have limited Moscow’s access to its foreign currency reserves and the global financial market.
Speaking to the Financial Times, the top IMF official also warned that the restrictions, including those on the Central Bank of Russia, could encourage the emergence of small currency blocs based on trade between groups of nations.
The Russian Federation has been trying to reduce its dependence on the American currency for years, especially after the United States imposed sanctions over the annexation of Crimea in 2014.
Following the latest round of penalties, introduced in response to Russia’s military assault on Ukraine, officials in Moscow have expressed interest in using cryptocurrencies and are even ready to accept bitcoin for energy exports, alongside the Russian ruble.
Gopinath noted that the growing use of other currencies in global trade would lead to further diversification of the reserve assets held by central banks.
Gita Gopinath believes the war will also boost digital financial assets, from cryptocurrencies to stablecoins and central bank digital currencies .
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