Moscow: At a meeting with the head of the New Development Bank, Dilma Rousseff, on Wednesday, Russian President Vladimir Putin said that creating alternative financial institutions is a challenging but essential undertaking at a time when Washington has weaponized the US dollar.
Before this week's Russia-Africa summit, the former president of Brazil, who assumed leadership of the former BRICS Development Bank in March, was in St. Petersburg to meet with Putin.
Putin told Rousseff, "I have no doubt that you will do everything to develop this institution, which I think is very important today. You will use your rich experience in government and knowledge in this area."
Given the state of global finance and the use of the dollar as a weapon in political conflict, the job is not simple at the moment, he continued.
Putin emphasised that the BRIC (Brazil, Russia, India, China, and South Africa) economic bloc is not working against anyone but rather in their mutual interests, including the financial sector. He made note of the fact that more and more BRICS members are already settling accounts in their home currencies.
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Rousseff concurred that developing nations in general ought to adopt this strategy. She added that the ability to raise money for national interest projects, ranging from social services to environmental concerns, is the biggest obstacle for developing countries. She claimed that because everyone is so preoccupied with the debt issue, this problem is ignored.
Although the US produces about 20% of the world's economic output, the dollar makes up more than 50% of the world's currency reserves. The financial sanctions against Russia in response to the conflict in Ukraine, which included the freezing of sovereign reserves and the blocking of SWIFT access, led to worries in other nations that similar actions might be taken against them in the future, but this percentage has actually decreased over the past year.
By weaponizing the dollar, first through monetary emissions and then by "stealing" Russian funds, Putin claimed that the US had "discredited the institution of international financial reserves" in October of last year. Since then, Janet Yellen, the secretary of the US Treasury, has concurred that sanctions may cause some nations to stop using the dollar.
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Andrey Kostin, the head of the Russian VTB bank, stated in an interview last month that "the long historical era of the dominance of the American dollar is coming to an end."
While the majority of economists in the West believe that the dollar cannot be replaced by any other currency, Putin suggested in June that the BRICS was developing its own reserve currency, possibly based on a basket of commodities