Dumping the Dollar: Will China, Russia, Turkey, and Iran Create a New International Currency?
This is not the first time that Russia has called for fleeing the dollar and switching to national currencies: in July 2019 the two countries signed a deal to settle bilateral trade in their respective currencies, while in October 2019, a similar agreement was struck by Moscow and Ankara. A month earlier, the Central Bank of Iran (CBI) announced that the Islamic Republic and Russia had agreed to carry out all financial transactions with domestic money, adding that about 30% to 40% of mutual trade between Iran and Turkey had been settled in liras and rials and the rest in euros.
The Bretton Woods monetary system, created after the Second World War, gave the dollar the status of an international reserve currency, explains the economist, adding that this allowed the United States to exert pressure through the dollar and manage financial flows around the world.
De-Dollarisation Efforts Worldwide
During its presidency of the eight-member Shanghai Cooperation Organisation (SCO) in 2020, Russia actively advocated the development of an ecosystem for payments in national currencies within the bloc, according to VEB.RF, a key Russian development institution, who assumed the role of chairman of the SCO Interbank Consortium for this period. Together with four observer states, the SCO bloc accounts for approximately half of the world’s population and a quarter of the world’s GDP.