The Bank of Russia does not consider prudent to completely abandon the dollar in international reserves, department director Alexei Zabotkin said in the State Duma today.
"From my personal point of view, complete exclusion of the dollar from [international] reserves is associated with excessive risks," TASS cited him as saying.
Zabotkin recalled that the whole range of liabilities is nominated in dollars, including the state debt. "Therefore, gold and currency reserves will be needed in a bad situation, when we have a dramatic worsening of the payment balance and budget revenues and when it will be required to settle such liabilities at the expense of funds in the budget, for example, transfers at the expense of the National Wealth Fund," he noted.
So it "will be better if assets also denominated in dollars are against a portion of such liabilities in this case," the department director explained.
Therefore, "it is probably wrong to completely reject the dollar in gold and currency reserves," Zabotkin concluded.
The chairman of the Board of the National Currency Association (NCA), Dmitry Piskulov, speaking to Vestnik Kavkaza, noted that dollars will remain in the Russian currency market in any case. "The dollar is the currency we are paid export earnings from sales of goods abroad. Since these contracts are denominated in dollars, there is an influx of foreign currency earnings into the country, which creates a turnover of dollars in the foreign exchange market. It is no secret that many countries pay with us in dollars, although the Russian government is in favor of increasing the share of national currencies in settlements," he recalled.
"As for gold and foreign exchange reserves, their structure should cover all currencies in which imports can potentially occur. If imports are in dollars, it is advisable to have dollars so as not to bear currency risks. Any freely convertible currency that has a liquid market, for example euros and pounds, can serve as substitutes," Dmitry Piskulov pointed out.
"By the way, the risk that settlements in dollars will be blocked for Russia is very unlikely. This would be a very wrong step on the part of the U.S. authorities, because the function of the dollar as an international settlement currency would be undermined. It’s just that Russia seeks systematically reduce dollar dependence," the chairman of the Board of the National Currency Association drew attention.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit Yuri Yudenkov, speaking to Vestnik Kavkaza, agreed with Piskulov. "First of all, the risk of abandoning dollar reserves is due to the fact that we have 70% of trade conducted in dollars. We simply cannot completely get rid of them. Even if we hypothetically sell all the dollars the government has, they will come back due to the sale of hydrocarbons. And vice versa, we buy part of the products for dollars, including because only the U.S. produces certain technological goods of a very high level," he said.
"In my opinion, the current level of dollar reserves is quite sufficient, there is no need to reduce it. The total amount of gold and foreign exchange reserves is now equivalent to $50 billion. If the dollar part of this amount is only $10-15 billion, there are no risks from possible sanctions, that is, this amount is quite normal. I think the topic of dedollarization is not relevant now," Yuri Yudenkov concluded.
