BOFIT Viikkokatsaus / BOFIT Weekly 2018/42

According to finance minister Anton Siluanov, the cabinet has taken up discussion of a de-dollarisation programme that would reduce the role of the dollar in the Russian economy. In practice, the government would try to incentivize companies to switch to rubles as the payment currency in their foreign trade. A measure under consideration is the elimination of repatriation regulations on ruble-denominated foreign trade earnings by 2024. At the moment, the dollar has an overwhelming dominant status in foreign trade payments, foreign loans and the central bank’s foreign currency reserves.

Discussions about reduction of dollar use has come up from time to time. This time around, the discussion is driven by concern over the possibility of new US sanctions. Dollar-denominated payments are typically routed via a US bank, so sanctions imposed by the US could interfere with the dollar-denominated payment traffic of Russian firms and banks. An advantage of using the dollar, however, is its liquidity on world markets. Additionally, pricing of many of Russia’s important export products such as crude oil is done in dollars. For these reasons, the planned measures seek to strengthen the role of the ruble, rather than ban the use of the dollar.