A prominent Russian economist has argued that ongoing U.S. sanctions against Russia could erode global confidence in the U.S. dollar over time, setting the stage for greater cross-border adoption of central bank digital currencies (CBDCs) like the digital ruble.
Alexander Razuvaev, a member of Russia’s Guild of Financial Analysts and Risk Managers, said Washington’s “actions against Russia” in response to the Ukraine">Ukraine war are chipping away at the dollar’s status as the dominant global reserve currency.
If the U.S. goes further by transferring frozen Russian assets directly to Ukraine, something some American lawmakers have proposed, it could accelerate moves away from the dollar by Russia’s trading partners, Razuvaev claimed.
He pointed to recent examples like China reducing its holding of U.S. bonds and using yuan to pay for Saudi Arabian oil imports. Over the next couple of years, regional powers like Turkey and Azerbaijan may also transition to settling trades with Russia using the digital ruble rather than the dollar, he speculated.
Razuvaev argued it is now critical for Russia to “secure foreign trade” links through alternative payment ecosystems like CBDCs. While he expects most Russia-China and Russia-Middle East trade to be conducted in yuan and Emirati dirham, respectively, the use of the digital ruble could take priority among former Soviet states closely aligned with Moscow.
The economist took particular aim at the U.S. for freezing around $300 billion in Russian Central Bank assets early in the conflict, a move he says has backfired. While the dollar will remain dominant globally, “America’s actions have undermined the authority of the dollar,” Razuvaev said.
Ultimately, he believes escalating sanctions pressure from Washington has only motivated Russia and its partners to accelerate their CBDC development efforts as they look to reduce reliance on the U.S. financial system.
