Is Russia‘s “de-dollarization” worth it?

2018 is Russia's first year of trying to move from the dollar to other currencies, it lost a potential return of about $7.7 billion. The Russian central bank increased its exposure to underperforming currencies such as the euro and the RMB, while it missed a 6.5% rise in the dollar. So, is the price of this "de-dollarization" in Russia worthwhile?

In fact, Putin's dollarization is also a last resort. Due to the Crimean crisis, the US economic sanctions against Russia have not stopped, and even continue to strengthen. By March 2018, after the "double-sided spy poisoning case" in the United Kingdom, the United States continued to strengthen economic sanctions against Russia. For example, many state-owned energy companies and senior government officials in Russia have been listed on the sanctions list by the United States. Of course, as a reflection of the US economic sanctions, Russia has also made three major "de-dollarization" events for the United States:

First, the de-dollarization of oil export trade. Recently, Russia's largest oil producer Rosneft announced that it will set all the crude oil and refined oil default settlement currencies for export to the euro instead of the original US dollar. In fact, if Russia continues to settle in US dollars in the future, both sides of the trade will be subject to the US dollar international system. If the US banking system wants to sanction you, it will impose sanctions on you. If you do not go to "dollarization," the risk is very high. Russia does not want to put its own economic lifeline in the hands of the sanctioners.

Second, Russia has gone to dollarization by reducing its holdings of US Treasury bonds. In November 2017, Russia held US$105.7 billion in US Treasury bonds. After 20 months of continuous reduction, the holding of US Treasury bonds was about $10 billion. At the same time, Russia has increased its holdings of gold. On the surface, Russia sells US dollar assets and increases its holdings of the RMB, missing the gains from the appreciation of the dollar, and the rmb is depreciating. But the same gold has risen very well this year, and the Russians have earned it. However, even if Russia polishes all US Treasury bonds and has nothing to do with the United States, such counter-measures are meaningless to the United States.

Third, Russia is also recently announced that starting next year, the country will borrow money in currencies other than the US dollar, and these currencies "are not only the euro, but also the renminbi." As of the end of 2018, the share of the renminbi in Russian foreign exchange reserves has soared from 2.8% to 14.2%. For Russia, increasing the foreign exchange reserves of the renminbi is mainly due to its fear of the ups and downs of the US dollar index, while the relative trend of the RMB exchange rate is relatively stable. Russia's move has promoted the further internationalization of the renminbi to a certain extent.

However, Russia's de-dollarization is mainly for the safety of its own assets, but its impact on the United States will not be too great, and other countries will not dare to respond positively. In 2018, US GDP exceeded 20 trillion US dollars, while Russia's GDP was only 1.6 trillion US dollars, less than one-tenth of the size of the US economy. At the same time, even if Russia holds US$150 billion in the highest US Treasury bond, it is not 10% of the size of US Treasury bonds at the time. Russia sold US Treasury bonds and immediately accepted them in countries such as Japan and the United Kingdom.

On the surface, Putin's series of measures are all de-dollarized. In fact, Putin is afraid of being under the economic sanctions of the United States. If he continues to implement dollarization, it is easy to get stuck in his neck. It is a kind of protection of domestic property. Helpless. In fact, no matter how much Russia goes to the dollar, the counter-effect on the United States is very weak. In the military, Russia may also have the ability to counter the United States, but in the economic and financial fields, Russia has only suffered. Maybe after the dollarization, the Russian economy can still be slightly better. If the US dollar system is imposed everywhere, I am afraid that the Russians will be even more sad.