Since March, the unprecedented financial sanctions imposed by the West on Russia have once again made the world realize the far-reaching influence of the US dollar in the global economic and trade network.
However, while the U.S. and Europe are exhibiting this "exorbitant privilege" and isolating Russia from the international financial system, some people think that these actions are "crazy" and "stupid", and that they may hurt themselves in minutes. Come and impact the dollar order.
The problem is that although Uncle Sam's sanctions are appalling and pose potential risks to some countries, and some big bank strategists even point out that the international monetary system may face a reshuffle, at this stage, there is still no other currency that can replace the dollar. position, including the much-anticipated but still infancy renminbi.
It has been more than a month since Russia invaded Ukraine. Although the Western sanctions against Russia have come as expected, they are more severe than expected.
Russia had conducted a stress test of possible sanctions as it battled the Ukrainian border at the beginning of the year.
At that time, a senior financial figure suggested to simulate a situation in which the ruble fell to 100 to 1 against the US dollar, but it was deemed unrealistic by the authorities and was not accepted.
By the end of February, economic sanctions from the United States and Europe were introduced one after another. Not only were many banks excluded from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment system, but even the foreign exchange reserves of the Russian Central Bank were frozen.
As a result, the ruble depreciated all the way, and the exchange rate against the US dollar fell from 81 to 1 before the invasion of Ukraine (February 23) to a low of 135 to 1.
Russia has about $640 billion in gold and foreign currency reserves, of which $300 billion has been frozen by Western sanctions.
(Xinhua News Agency)
In response to the freezing of nearly half of the central bank's reserve assets, Russian Foreign Minister Sergei Lavrov said last month that no one had predicted in advance that the West would do so because "it is effectively a form of theft".
In order to stabilize the ruble exchange rate, the Russian central bank had to raise the benchmark interest rate to 20% and implement strict capital controls when it failed to use its foreign reserves.
In addition, Russian President Vladimir Putin announced on the 23rd of last month that for "unfriendly" countries and regions, Russia will switch to rubles when supplying natural gas to them.
As soon as the news came out, the exchange rate of the ruble against the dollar jumped immediately; it has now returned to the level before the conflict, and the Russian benchmark interest rate has also been lowered.
Zhang Ming, deputy director of the Institute of Finance of the Chinese Academy of Social Sciences, analyzed that the United States and some European countries have frozen Russia's foreign exchange reserves, destroying the safety of the world's most important safe asset so far, the US treasury bond...
For details, please read "Hong Kong 01" Electronic Weekly Issue No. 313 (April 19, 2022) "
Sanctions against Russia impact the US dollar order and the internationalization of RMB is a long way to go
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