The International Monetary Fund’s (IMF) first deputy managing director, Gita Gopinath, in an interview on Thursday stated that financial sanctions placed on Russia as a result of the Russian assault on Ukraine would reduce the dollar’s supremacy, She also predicted that the Russian-Ukraine situation will boost the use of fintech, such as crypto, altcoins, and central bank digital currencies (CBDCs).
Will it be the end of dollar supremacy?
She further believes that the growing use of digital banking, including cryptocurrencies, and diminished dollar dominance will lead to a diversification of nations’ foreign reserves. Although the dollar would remain the leading global currency even in this situation, fragmentation at a lesser level is probably quite believable.
Russia Ukraine development and crypto adoption
Furthermore, western sanctions and limitations on Russia’s central bank prompted the Russian government to switch from the US dollar to favour the cryptocurrencies like Bitcoin. As per sources, Russia has recently decided to accept crypto as payment for its oil and natural gas transactions with its allies.
As a result, increased usage of digital currencies in global commerce might supplant dollar supremacy, resulting in wider diversification of national central banks’ reserve assets. As countries are removing Russia from the global financial system, Russia has been focusing on reducing its dependence on the dollar.
Russia has been aiming to minimise its reliance on the dollar since the United States imposed economic sanctions in reaction to the annexation of Crimea in 2014.
