Russia and China’s agreement to switch to domestic currencies in trading will bring about the “de-dollarization” of the global economy, says Jon Hellevig.
A recent agreement between Russia and China to switch to domestic currencies in bilateral trading will pave the way for the “de-dollarization” of the global economy, a Finnish political economist says.
Russia and China are set to use their own currencies in trading to reduce the influence of the US dollar in response to the latest round of US sanctions against Moscow over the Ukraine crisis.
On December 29, an agreement signed at the end of October came into effect which would allow a currency swap of CNY150 billion (up to 25 billion USD) between the two countries.
This currency agreement is a “very significant development and it will be a boost for the Russian economy,” Jon Hellevig told Press TV on Wednesday.
“It means a strong move towards the de-dollarization of the economy, not only Russia and China’s economy, but the whole global economy,” he added.
The US economy will lose its strongest advantage, which is printing US dollars due to this currency swap because the Federal Reserve will have to raise interest rates and that will cause the US stock market to collapse, Hellevig warned.
Moscow has been witnessing a decline in the value of its currency, which is going through its worst crisis since 1998 due to Western embargoes, dropping oil prices and trade fears.
Russia has been hit with a series of sanctions by the US and the European Union that have accused Moscow of playing a role in the ongoing crisis in eastern Ukraine, a claim Russia has repeatedly rejected.