2 September 2021
KEY CONCLUSIONS
The dollar’s position in the global economic market is unstable and the monetary system needs alternatives
“The risks that occur when politics begin to prevail over the global economy and there are trade wars, the freezing of accounts, restrictions in settlements, and threats to use the dollar infrastructure as part of sanctions imposed by the issuing country of the global currency against various countries are completely unexpected for them, be it countries of Western Europe or Asia. Everyone has experienced this in recent years […] [This is] an unsurmountable conflict of interests: a particular party has interests in the national monetary policy. If the currency that this country issues is a reserve currency, there are other interests and needs of the world economy in relation to the reserve currency,” Deputy Secretary of the Russian Public Chamber Alexander Galushka.
“Due to the actions of the United States, virtually the entire global financial system is in a state of great instability. The economies of all countries are affected by this, so we must reform and improve the international monetary system,” Professor and Dean of the China Institute for WTO Studies at the University of International Business and Economics Tu Xinquan.
PROBLEMS
The use of the dollar as an international currency is hindering the development of the global economy
“Confidence in the dollar is not exactly declining. Everyone understands that something needs to be done because we could probably continue this way, but no one wants it to continue. The primary issuer of the main currency has a chance to put pressure on various elements of the global financial infrastructure […] The consensus in society on a global scale has matured: people would like to have something alternative to the dollar,” Head of the Russia 24 TV Channel’s Economic Programme Alexey Bobrovsky.
“It should be said that now the issue of de-dollarization is one that causes a lively discussion in all major countries, so we must implement this process in order to maintain the modern dynamic progressive development of the economy. This is also important for developing countries. As such, the dollar is currently more like an obstacle to the development of the global economy,” Deputy Secretary General of the Chinese People’s Political Consultative Conference National Committee and Vice President of the China Economic and Social Council Guo Jun.
The problem is the massive capital outflow from Russia and insufficient investment attracted by the Russian regions
“In July of this year, the Russian Central Bank raised the forecast of capital outflow from our country from USD 35 billion to USD 50 billion. On the one hand, we have total underinvestment in our economy and a huge need for investment resources, while, on the other hand, we are dominated in the biggest issue by all-out, constant, massive, and large capital outflow,” Deputy Secretary of the Russian Public Chamber Alexander Galushka.
“With some of the richest subsoil and resources, the Transbaikal Territory is the poorest in terms of implementing them. Each time something happens – investment projects are suspended or existing enterprises go bankrupt. At the time when I took office in 2018, the economy of the Transbaikal Territory had a huge number of various unrealized – practically RUB 23 trillion – deposits in the unallocated [subsoil reserve] fund and in investment projects stuck in the implementation of investment projects. These projects were implemented only for foreign investments,” Transbaikal Territory Governor Alexander Osipov.
SOLUTIONS
A supranational currency should be used as an international means of payment and the Hong Kong dollar should be used prior to its creation
“The ability to use the Hong Kong dollar, which, while not being the national currency of one of the major SCO countries, is nevertheless a freely convertible currency and can implement all the objectives and minimize the risks that were discussed today. In the long term, I believe the most proper thing to do is develop economic integration within the framework of the SCO and have a phased movement towards the creation of a supranational SCO currency. It may take 10 or 15 years,” Advisor to the Chairman of the Management Board of the Eurasian Development Bank and Governor of the National Bank of the Republic of Kazakhstan Grigory Marchenko.
“The next step in the development of the financial architecture is a transition from clearing [non-cash settlements between countries, companies, enterprises, and banks] to a payment union with the establishment of an understandable theory of a supranational currency based on best practices that ensures international trade, international settlements, and economic communications,” Deputy Secretary of the Russian Public Chamber Alexander Galushka.
“The designation of a single currency that would not be the currency of a particular country would probably help stabilize the global financial system,” Professor and Dean of the China Institute for WTO Studies at the University of International Business and Economics Tu Xinquan.
Investing in the infrastructure of Russian regions will contribute to their development and capital inflow
“I think that most of the country’s regions have a peculiarity in their investment and economic development, and, of course, they all require large volumes of investment and infrastructure development through investment [...] Without normal infrastructure, it’s simply impossible to develop a single industry and ensure livelihoods,” Transbaikal Territory Governor Alexander Osipov.
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