Russia not to ban dollar use

Russia not to ban dollar use

Russia’s government doesn't plan to restrict dollar usage in the country, but intends to approve a plan to reduce dollar usage, as the Kremlin steps up efforts to cut dependence on the U.S. currency amid fears of new U.S. sanctions.

"The government, its financial and economic bloc, is working on the issue of reducing the economy’s dependence on the U.S. currency, including by creating incentives and mechanisms to switch foreign trade settlements to national currencies. Work in this direction is not related to any personal initiatives expressed at various venues and reflects the strategic direction of the government," the press service said.

The government’s plan doesn’t envision any restrictions on dollar usage, instead focusing on easing the use of other currencies for trade. Legal changes to facilitate using other currencies also are in the works. The program is based on a proposal made by head of VTB Bank Andrey Kostin.

Russia’s central bank is also involved in the effort, discussing possible mechanisms for getting access to foreign exchange without going to the international market, Bloomberg reported with reference to the Bell.

The professor at the department of the stock market and investments at the Higher School of Economics, Alexander Abramov, speaking with Vestnik Kavkaza, noted that "dollar still play an important role in planning real estate transactions." "In general, the ratio between rubles and dollars in this segment is about 50:50," he said.

"With all the achievements of the ruble, we should not ignore its risks. We could not solve the main problem in the country - how to avoid devaluation. The devaluation of the ruble in Russia is relatively programmable, it happens every 7-8 years because the Russian economy is externally determined by gas, oil and metal prices. It seems to me that this threat is still relevant,due to with which the dollar will remain an important means of planning citizens' savings, " Alexander Abramov stressed.

Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, supported the government's decision to refute rumors about a possible ban on dollar use. "The population should clearly understand that we have enough cash in dollars in the country now, and there should be no panic. The banks will pay all obligations and the Central Bank will help them in cash. As for the calculations, since there is a threat of blocking accounts of our leading banks, they need to take all possible actions," he warned.

The economist also drew attention to the fact that the dollar can’t be replaced while trading with the United States. “I mean the import of American products: modern machinery for the atomic energy and other industries, raw materials for the pharmaceutical industry, heavy mechanical engineering, radio electronic components and computing hardware," Yuri Yudenkov concluded.