Gita Gopinath says sanctions could encourage emergence of small currency blocs based on trade between separate groups of countries
Gita Gopinath, the IMF’s first deputy managing director, said the sweeping measures imposed by western countries following Russia’s invasion, including restrictions on its central bank, could encourage the emergence of small currency blocs based on trade between separate groups of countries.
Russia has sought for years to reduce its dependence on the dollar, a campaign that accelerated in earnest after the U.S. imposed sanctions in retaliation to its annexation of Crimea in 2014.Article content Gopinath said the greater use of other currencies in global trade would lead to further diversification of the reserve assets held by national central banks.
The dominance of the dollar — backed by strong and highly credible institutions, deep markets and the fact that it is freely convertible — was unlikely to be challenged in the medium term, she added.
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