De-dollarization in Russia

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It is clear that this role of the dollar due to the exceptional position of the United States in the global economy. And this provision, in turn, is a product of historical development — the twentieth century was more than favorable to America, unlike the great powers of the Old world. The dominant role of the dollar is also tied to the peculiarities of the us economy, which produces lots of goods, and at the same time represents the largest market.

Дедолларизация в РоссииBut the United States began to undermine the dollar, politicizing its use and imposing appropriate sanctions, not always, to put it mildly, misplaced, States, banks and companies. And it’s annoying not only Russia.

The attempt of boycott

If the Declaration of a possible rejection of the dollar by regional powers (Venezuela, Iran, Turkey) you can ignore the economic and political weight of these countries in global scale are simply not comparable with the US, the initiatives of the EU and Russia should be taken seriously.

In early December the European Commission published a program aimed at increasing the role of the Euro in world Finance. It is expected to increase the share of Euro in international payments, primarily for energy and products of strategic industries, and expanding the range of financial instruments denominated in euros.

In the great future of this program are hard to believe. Unlike China, Russia and the United States, as the United States, the European Union is a rather loose conglomerate of countries with different levels of political, economic and social development and often competing interests.

But pay attention to the trend of worth. As well as be aware that de-dollarization on a global scale can happen only in case if there is either an economically and politically powerful state, comparable to the United States, the monetary unit of which will challenge the dollar, or when 3-4 large States unite and their currencies will jointly establish a new global financial order.

So, before the First world war, the key global currency was the British pound, between the two world wars he fought against the dollar for dominance in the world, and during the Second world war finally gave way to “American.” That is, the process for the possible loss of dollar its present position is a difficult, long dependent on many factors, among which the Russian project “de-dollarization” is not the key.

Features of national savings

Go back to Russia. The scale of the “de-dollarization” of the country has been so considerable that concerned the population began to withdraw dollars from banks. In August 2018, according to some experts, investors have returned $1.5 billion.

In response, banks are usually stingy on the interest rates on deposits almost doubled their deposits in dollars with a 1.65 – 2% to 3.5-4% per annum. And only after that the dollars returned to the banking system.

In Russia, the dollar is popular. If we talk about savings, according to statistics of the Central Bank as of 1 November, banks attracted funds of legal entities and individuals in rubles amounted to 42,4 million rubles, and in foreign currency and precious metals — 15.1 million rubles. Often foreign currencies placed on deposits of legal persons.

Given the current structure of foreign exchange reserves, relatively low investment attractiveness of the Euro and “metal accounts”, as well as significantly higher rates for deposits in dollars compared to euros, it can be assumed that dollar deposits are not less than 70% of the total volume of funds in foreign currency and precious metals.

What is the reason for such popularity of the dollar? The lack of patriotism among the population? Lack of understanding of the negative effects of the dollar dependence? Neither the first nor the second. It’s quite different — namely, the adequacy and good memory of the Russians.

People remember that in 2008, the ruble depreciated against the dollar by 17.7%, and in 2014 — 58%. In 2018, the Russian currency had weakened by 16%. With such dynamics is clearly more profitable to keep money on Deposit in us dollars, even by 1.5 – 2% per annum, than in rubles at 6-7% per annum.

A strange way to help the ruble

One of the causes of de-dollarization in Russia — the desire to return to the ruble its role as the sole tool of valuation of goods and services, savings, lending and payments. However, this function needs to be provided not only by various constraints, how much reliability and stability of the national currency. But we, unfortunately, do not observe. The Russian authorities with amazing regularity stepping on the same rake.

On the background of political and economic stabilization in the first half of 2000-ies the share of the ruble in settlements with EurAsEC countries increased by about 70%, displacing the dollar, but the crisis of 2008 returned to the primacy of the us currency. During the post-crisis recovery of the rouble’s got the height, but the Dec 2014 put everything in its place. Nevertheless, the government still hopes to increase the price of oil and again buying dollars to sell their depreciating rubles and impose a budget for “commitments” before the population.

A model of strategic thinking in the economic sphere can be considered the proposal of the Ministry of industry and trade to support the company UC Rusal is the only aluminum producer in the country — to permit the sale of beer in aluminum cans during the night, and the stalls and kiosks. Meanwhile, aluminium is actively used in the aviation industry, so its development on the basis of domestic raw materials, which don’t need to buy the proverbial dollar, and would thus import substitution.

With such industrial policy of de-dollarization will not help.

What, then, is it necessary? First, to bargain on topical issues with US. Of course, Russian investments in us dollars (cash and securities) far from Chinese or Japanese, but the decrease of this share can cause some inconveniences for US.

And, secondly, to sum up the ideological base for additional controls over income and cash transactions of citizens and, of course, their taxation. Speculation around possible limitations for individuals, like the requirement to present a certificate 2-pit in the exchange astronomical amount of 15 000 rubles for dollars and euros, support this conclusion. It would be nice if they remained a speculation.

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