De-Dollarization Efforts in China and Russia
Date of Publication
1-1-2023 12:00 AM
Security Theme
Economic Stability
Keywords
China, Russia, de-dollarization, currrency exchange, sanctions, economic policy, renminbi, RMB, ruble, digital currency, BRICS, People's Bank of China, Mir, electronic payment processing, SPFS, economic stability
Description
For more than a decade, China and Russia have sought to reduce their use of the U.S. dollar, or “de-dollarize” their economies, in an effort to shield their economies from U.S. sanctions, reduce exposure to the effects of U.S. economic and monetary policy, and assert global economic leadership. While China and Russia have somewhat reduced their dollar use, both countries, as do most countries, still rely heavily on the dollar. China holds significant dollar reserves, and does not allow its currency, the renminbi (RMB), to be traded freely in foreign exchange markets. This limits the RMB’s use in cross-border transactions and has constrained China’s broader de-dollarization efforts. Russia’s ruble is not widely used abroad, and global energy markets (Russia’s main exports) are traditionally denominated in dollars. Over time, however, if de-dollarization efforts gain traction, there could be implications for the U.S. economy, U.S. sanctions, and U.S. global economic leadership.
De-Dollarization Efforts in China and Russia
For more than a decade, China and Russia have sought to reduce their use of the U.S. dollar, or “de-dollarize” their economies, in an effort to shield their economies from U.S. sanctions, reduce exposure to the effects of U.S. economic and monetary policy, and assert global economic leadership. While China and Russia have somewhat reduced their dollar use, both countries, as do most countries, still rely heavily on the dollar. China holds significant dollar reserves, and does not allow its currency, the renminbi (RMB), to be traded freely in foreign exchange markets. This limits the RMB’s use in cross-border transactions and has constrained China’s broader de-dollarization efforts. Russia’s ruble is not widely used abroad, and global energy markets (Russia’s main exports) are traditionally denominated in dollars. Over time, however, if de-dollarization efforts gain traction, there could be implications for the U.S. economy, U.S. sanctions, and U.S. global economic leadership.
