Dmitry Migunov: Russia needs time to exit the dollar, as a quick withdrawal won't work


From the Middle East Media Research Institute, Washington
Tuesday, August 20, 2019

After sustaining a series of very tough sanctions imposed by the United States in 2017-2019, Russia has redoubled its efforts to modify the dollar-dominated international trade system. Russian expert Dmitry Migunov explained that Russia's de-dollarization plan consists of two parts.

The first is to lower the dollar's share in Russia's international reserves, and the second is the transfer of the country's international trade from the dollar to other currencies, including the ruble. Although Russia has somewhat reduced its international transactions in dollars, there are several reasons why a rapid de-dollarization is not going to succeed and, in any case, it's not the ruble but primarily the euro that is substituting for the dollar.

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Alternative currencies, such as the Russian ruble, the Chinese renminbi, the Turkish lira, and the South African rand, are subject to severe rate fluctuations that create extremely high risks of loss. Also, the transition to accounts in currency alternatives to the dollar inescapably incurs a rise in transaction costs.

Furthermore, the dollar is popular not only thanks to the economic might of the United States but mainly thanks to the worldwide existence of a system of dollar accounts. One doesn't have to invest any efforts to obtain and use it in accounts. "Therefore, to speak of the full ejection of the dollar as the basic currency of trade in Russia, or in any other country, is still premature," Migunov concluded.

Below is his article. ...

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