True de-dollarization is still a long way off.

This opinion was expressed by Deputy Chairman of the State Duma Committee on Economic Policy Mikhail Delyagin during a press conference in the NSN, dedicated to discussing the possible refusal of a number of countries from the dollar in bilateral trade and the transition to national currencies.

According to him, we can only talk about real de-dollarization when “we stop quoting the prices of goods that are important to us in dollars”:

“Today we can sell raw materials for Mongolian tugriks, we can buy the high value-added goods we need for any currency up to the Israeli shekel, but all prices are still converted into dollars. The Shanghai Stock Exchange operates in China, which quotes oil in yuan, but in reality everything is still recalculated in dollars. So, it is still very, very far from high-quality de-dollarization.”

Mikhail Delyagin’s opinion was supported by another participant in the press conference, Honored Economist of the Russian Federation, Head of the Department of Labor and Social Policy of the RANEPA Sergey Kalashnikov. According to him, settlements in dollars are prohibited by law in the domestic Russian market, and we cannot yet refuse the dollar in foreign trade operations, since the dollar today is a universal currency that somehow normalizes all other currencies:

“We can trade in any freely convertible currency, but everyone is still pegged to the dollar. Therefore, if we talk about Russia, I do not think that any changes can occur in the near future, except for one thing: it can be assumed that the increase in the cost of parallel imports will lead to the fact that the problem of a shortage of dollars will become acute. This will occur in parallel with the decline in dollar receipts due to sanctions. As a result, the lack of dollars for parallel imports, which will require more and more of them for such a “gray” turnover, may lead to the fact that more and more other currencies will be used in foreign economic transactions.”

As another participant in the discussion, an economist, a professional expert in the field of enterprise management, a member of the boards of directors of a number of Russian companies, Evgeny Zmiev, recalled, there are completely objective reasons for the dollar to be the dominant currency today:

“At the beginning of the 2000s, the share of world reserves in dollars was 72%, at the beginning of 2023 – 59%. That is, the share is decreasing, but 59% for one currency is still a dominant position. The United States occupies the first place in terms of its share in world GDP, accounting for 24.5%. That is, a quarter of the world’s GDP is produced in the United States. It is the largest economy in the world. In terms of purchasing power, the US is in second place after China with 15%. Another very important criterion is that the United States has a record trade deficit: they are in first place in the world in this indicator. In 2022, this deficit amounted to $1 trillion 180 billion. What does it say? The fact that the dollar in this situation simply cannot but be the dominant currency: if a trillion more goods were imported into the country than they were exported, then this trillion can leave the United States only in dollars, after which they will disperse around the world. Therefore, these countries trust the dollar, trust the US and take dollars. Another important condition for the dominance of the currency is the existence of economic ties with most countries of the world, the United States also has this. Thus, the share of the dollar may decrease in calculations in connection with the creation of national currencies (as was the case, for example, with the euro), but the hegemony of the dollar is not expected to end due to objective reasons.

Russia, according to Yevgeny Zmiev, has a completely different situation:

“By the end of 2022, we have a trade surplus of $332 billion. That is, Russia exported more goods for this amount. This suggests that in this situation, the ruble cannot be any kind of global currency.”

The Chinese yuan is also not threatened by such a prospect, he said:

“China has a foreign trade surplus, record numbers. It increases exports. He has a huge stock of foreign currency, he is forced to do this. This is the answer to the question why the yuan will not be a significant world currency in the near future. He is physically lacking, he is physically absent. In the Russia-China situation, an interesting scheme is being built. If, until recently, our trade with China was one to one, then by the end of 2022, China gave more than 38 billion, it either gives in dollars or yuan. It turns out that it is beneficial for China to give yuan, it will simply print them.”

In addition, as Mikhail Delyagin recalled, China itself has a trillion dollar reserves, and it is reducing this share very slowly so as not to devalue them. In foreign trade, yes. China tries to trade in yuan with whomever it can, but with America it does not trade in yuan. Russia, however, according to the economist, was not ready to abandon the dollar and still is not ready to do so. In the words of Mikhail Delyagin, “when someone kicks you in the ass from somewhere, you don’t need to say that you yourself left or refused something.”

Sergei Ishkov.

Freepik photo