Against the background of deteriorated inter-bank lending conditions in the context of tightening global liquidity and intensified U.S. sanctions against Russia, the government is reportedly working on measures to reduce the Russian economy’s dependence on the USD. The plans includes encouraging and facilitating the usage of alternative currencies in international trade. For example, transactions with the EU and China, Russia’s main trading partners accounting for nearly 60% of its foreign trade, could be shifted into EUR and CHY while trade with CIS countries could be done in RUB. However, previous efforts to do so have had little success, highlighting that close cooperation with other countries is needed. This may be easier now in a world of rising U.S. protectionism. Other measures could be delisting of major Russian companies from foreign stock exchanges and increasing gold and EUR reserves. Russia has already reduced holdings of U.S. government debt by around USD80bn this year. Still, large-scale de-dollarization will take time – estimates range between 1.5 and five years.
