Sunset of US Dollar: Desired or Valid?

Professor Katasonov about the fate of the “American” in Russia and in the world. Part 2

In August 2016, the ruble accounted for 0.21% of all international payments, and in August 2018 its share rose to 0.28%. From the 20th place, the Russian ruble moved to 18th place (in front of it there is the Turkish lira, followed by the South African rand). It is noteworthy that the Russian ruble was not included in the top twenty currencies in the rating for all types of payments (both international and domestic). In the context of growing economic sanctions, Moscow is making efforts to minimize the risks of a possible shutdown of the Russian banking system from the SWIFT system. Therefore, we have created and launched at the end of 2015 a system called SPFS (financial messaging system). Part of the payments and settlements between Russian subjects of payment relations (mainly Russian banks) began to pass through SWIFT, not SPFS. By the middle of this year, about 400 Russian organizations had already participated in the SPFS.

 

As for the international payments of Russian organizations, they still (with rare exceptions) continue to pass through SWIFT. Consequently, the risks associated with the possible blocking of SWIFT for Russia remain. Moreover, domestic payments in Russia are far from being all transferred to the SPFS. Figuratively speaking, many continue to travel from Moscow to Ryazan via Paris.

 

I would like to remind fans of sensations that a few years ago in the first place among the currencies, for payments, there was not the US dollar, but the euro. This is how the picture looked like, according to SWIFT, as of January 2012 (the share of currencies in total payments, both domestic and international,%):

euro – 44.04;

United States dollar – 29.73.

As you can see, the gap between the euro and the US dollar was enormous. But the picture for July 2013 (%): euro – 37.50; US dollar – 36.14.

Just a year and a half later, the dollar almost caught up with the euro, it was already on the heels of the European currency. And at the end of the same 2013, the euro has already bypassed. In 2015, the gap between the US dollar and the euro reached its maximum, with a share of the US dollar exceeding the bar at 45%, and the share of the euro falling to 22–23%. Then the gap between the two currencies again began to gradually decrease due to a gradual decrease in the share of the US dollar and a gradual increase in the share of the euro. There are explanations for such trends, but this is not the purpose of this article. So, in the world of currencies, such fluctuations are not new, cyclical ups and downs of individual currencies in terms of share in payments, international reserves, operations on the FOREX market, etc. regularly. Figuratively speaking, also regularly, as there is a change of seasons (seasons) and temperatures. Of course, in the history of the earth, some climatic catastrophes occurred that violated the usual annual temperature cycles. For example, we know that in the history of the Earth there was glaciation (the onset of the ice age). But it is completely incorrect to say, for example, that global warming is coming on the grounds that spring has come and the thermometer has begun to rise. Or, on the contrary, the global cooling is coming due to the fact that the summer has ended and the average daily temperatures have begun to decline. Why did our media focus on the latest SWIFT data on the decline in the share of the US dollar? Yes, because this news is blowing into the sail of the initiators of the next campaign that began in Russia this summer to combat the dominance of the US dollar in our economy (the main initiators are Kostin and Siluanov). Of course, supporters of de-dollarization could not but rejoice the latest SWIFT data. The decline in the share of the US dollar was presented as the last agony of the “green” currency hated by the Russians (and even some of the sight-seeing Russian oligarchs). But I am afraid that in this case the desired is given for real. I will continue my analogies with temperature fluctuations on the planet.

President Putin instructed the monetary authorities to solve the task of de-dollarizing the Russian economy. The US dollar was and remains, figuratively speaking, a “fuel” that heats up the “house” called the “Russian economy”. It is necessary to switch to domestic “firewood” called the “Russian ruble” in order not to depend on the quirks of suppliers of “dollar fuel”. But for the transition to domestic “firewood” you must work. And noone wants to work. Yes, gentlemen Kostin and Siluanov do not understand how to prepare “firewood” at all and how to heat the “Russian stove” with them. And then an unexpected radio transmits the good news that there will be no winter and global warming is coming. So the Russian media began to talk about the coming global warming, that is, the exhaustion of the US dollar. I have not the slightest sympathy for the US dollar. But this is not a reason to declare his speedy death. The US dollar is tenacious. Of course, it is mortal, but it is naive to think that death will come tomorrow. Waiting for its collapse becomes for many the excuse for inaction. What to do? First, arrange the preparation of “firewood”, i.e. the issue of a truly Russian ruble (as opposed to the current fictitious, which is a repainted dollar). Secondly, to restore the half-ruined “Russian furnace”, that is, the real sector of the economy.

How to restore the “Russian stove”? Since we started doing it exactly 90 years ago. I mean the first Soviet five-year plan, which started on October 1, 1928, which, in turn, was the beginning of industrialization.

Third, to close all doors and windows in our “Russian house” in order not to warm the atmosphere and not to burn “firewood” for nothing. Here I mean the introduction of restrictions and bans on cross-border capital flows. This is at least. And for a more reliable warming of the “house”, again, use the experience of restoring and strengthening the Soviet economy. As it is known, for such “warming” and reducing the dependence of the internal temperature of the “house” on climatic quirks (conjuncture of world markets and various kinds of economic sanctions of the West), such means as the state currency monopoly and the state monopoly of foreign trade were used. It is regrettable that the lion’s the share of publications in the Russian media is not devoted to the problems of restoring the Russian economy (“at home”), but to discussing issues related to temperature fluctuations of the “atmosphere” (world market conditions s, including foreign exchange, including the positions of the US dollar). Or mere complaints (okhaniye and ahanye) on

why it is so so cold in our today’s dilapidated “house”. Finally, it’s time to make the theme of restoring the “Russian house” key. And to begin its discussion with a review of the experience of industrialization in the USSR. Fortunately, there is even a formal reason for this – the 90th anniversary of the start of the first Soviet five-year plan.