As Nigerian Naira plummets to N855 to $1 Russian president says the dollar has been weaponised calls for new monetary order
Setting up alternative financial institutions is a difficult but necessary endeavor at a time when Washington has weaponized the US dollar, Russian President Vladimir Putin said on Wednesday, at the meeting with New Development Bank head Dilma Rousseff. The former president of Brazil, who took over the former BRICS Development Bank in March, was in St. Petersburg to meet with Putin ahead of this week’s Russia-Africa summit.
“I have no doubt that, using your rich experience in government and knowledge in this area, you will do everything to develop this institution, which I think is very important today,” Putin told Rousseff.
Russian President Vladimir Putin meets with New Development Bank head Dilma Rousseff in St. Petersburg, July 26, 2023. © kremlin.ru
“In current conditions, this is not an easy job, given what is happening in world finance and the use of the dollar as a tool of political struggle,” he added.
Putin underscored that the economic bloc of Brazil, Russia, India, China and South Africa is not aimed against anyone, but working together in mutual interest, including in finance. He pointed out that BRICS members are already increasingly settling accounts in national currencies.
Rousseff agreed that this approach should be implemented by developing countries in general. She also said that the biggest challenge to developing nations is the ability to raise funds for projects of national interest, from social service to environmental issues. This issue, she argued, gets neglected as everyone focuses on the debt problem.
The US accounts for some 20% of global economic output, but more than 50% of world currency reserves are held in dollars. That percentage has actually shrunk over the past year, as the financial sanctions against Russia over the Ukraine conflict – including the freezing of sovereign reserves and blocking of SWIFT access – raised concerns in other countries that such measures might target them in the future.
Last October, Putin argued that the US had “discredited the institution of international financial reserves” by weaponizing the dollar, first by monetary emissions and then by “stealing” Russian funds. Since then, US Treasury Secretary Janet Yellen has agreed that sanctions might drive some countries to abandon the dollar.
“The long historical era of the dominance of the American dollar is coming to an end,” Andrey Kostin, head of Russia’s VTB bank, said in an interview last month. While most Western economists don’t see any other currency capable of replacing the greenback, Putin hinted in June that BRICS was working on a reserve currency of its own, perhaps based on a commodities basket.