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Russian president doubts dollar, open to yuan-ruble swaps

Section: Daily Dispatches

By Lyubov Pronina
Bloomberg News
Friday, June 5, 2009

ST. PETERSBURG, Russia -- Russian President Dmitry Medvedev questioned the U.S. dollar's future as a global reserve currency and said using a mix of regional currencies would make the world economy more stable. Russia may consider ruble-yuan swaps.

The dollar "is not in a spectacular position -- let's be frank -- and its prospects cause various questions as do the prospects for the global currency system," Medvedev, who today hosts an international economic forum in St. Petersburg, said in an interview published by the Moscow-based Kommersant newspaper. Regarding the global financial system, "therefore our task is to make it more mobile and at the same time more balanced."

Medvedev is expected to reiterate his call for creating a new world currency at the forum today in his keynote address on the first lessons of the global crisis. Russia's president has called for creating regional reserve currencies as part of the drive to address the global financial crisis. Russia’s proposals for the Group of 20 meeting in London in April included the creation of a supranational currency.

It is too early to be fully optimistic that the global financial crisis is easing, he said in the interview. The most dramatic scenarios for a collapse haven’t occurred, he said.

A new world currency may be on the agenda when Medvedev meets counterparts from Brazil, India and China on June 16 at a summit in the Ural Mountains city of Yekaterinburg, the Kremlin said this month.

"This idea has potential, even though some of my G-20 colleagues aren't actively discussing it at the moment," Medvedev told Kommersant. "However, for example, in the opinion of our Chinese colleagues it is quite a possible step. The most important thing is not to walk away from discussions on this topic."

Turning the ruble into a reserve currency is still a possibility, especially if some of Russia's partners start making payments for their oil and gas in rubles, Medvedev said. Russia might consider setting up ruble-yuan swap positions similar to the recent accord suggested between China and Brazil, he said.

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