• Thu. Apr 18th, 2024

Russia Removes USD from National Wealth Fund in Protest against US Sanctions on Moscow

Jun 10, 2021

The Russian Government has taken an initiative through which it is removing the US Dollar currency from Russia’s National Wealth Funds. The decision has been taken after the US announced intensifying sanctions imposed by the US on Moscow. The National Fund currently secures US$ 601 Billion which is comprised of crypto and gold assets.

A game of ‘tit for tat’ is currently going on between the two superpowers of the world. One state was once a superpower but the title was snatched by another state. Yes, the tussle is between the traditional rivals i.e. the US and Russia.

After taking over the US Administration President Biden, the Biden Administration has sent a message which did not please the Russian Government. The US Government decided to intensify the sanctions which it had imposed upon Mosco. Under this intensification, the US Government in Washington had in fact imposed further sanctions upon Moscow.

As retribution, the Russian Government too has come with a plan. An initiative has been taken by the Russian Government through which de-dollarization has been taking place within the Russian Government. The first action taken in this regard relates to the Russian National Wealth Funds. It has been decided to completely remove the existence of US Dollar currency from the fund. At the present moment, the fund holds assets in the form of crypto and gold worth about US$ 601 Billion.

Anton Siluanov, the Federal Finance Minister of Russia, remarked that since Washington has been imposing sanctions, therefore, such an initiative is warranted. He was attending the International Economic Forum where he re-affirmed that the US currency will be replaced from the fund. Siluanov said that like any other central bank operating in a country, Russia too will be reducing the use of USD. From now no further investments, particularly any investment in NWF, will not be done on the basis of USD, stated Siluanov.

Thereafter Siluanov gave the timeline from when the initiative will be implemented in letter and spirit. The Minister said that the implementation will take place in July and either JPY or Euro or GBP will be considered over USD.

The Russian NWF was developed for supporting the existing pension system in Russia. Within this fund, the Russian Government has also kept gold and reserves in the form of fiat and cryptocurrencies as well.

Timothy Ash of Bluebay Asset Manager said that the tussle between the two countries is political. The message is loud and clear that whatever sanctions have been imposed by Biden, they don’t matter at all, suggested Ash. In addition, Ash was of the view that there is a possibility that Moscow might be anticipating further sanctions. In order to stop the US from imposing any further actions, it could be a political move of Russia, opined Ash.

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