In late November, Russia’s President Vladimir Putin took part in an annual forum, orchestrated by VTB Capital. The state leader did not evade questions from forum participants. One of them asked a burning question about de-dollarisation. Indeed, after years of US sanctions, the Kremlin has been working on plans to abandon the US dollar in the domestic economy. More sanctions are likely to follow later. The idea of scrapping the US currency in borrowings and international payments has been backed by Russia’s finance ministry and the Bank of Russia.

Speaking at the forum, Vladimir Putin said that it should be implemented gradually. He admitted that such measures are a forced decision. “We did not set a goal of giving up the US dollar. We have to do it. We do not mean to take tough measures which would cause us pain,” the President made comments. The Russian leader acknowledged that the domestic economy has to be adjusted for the US sanctions. “It looks like the one who takes such decisions is shooting not at one’s leg but a bit higher. Instability in dollar settlements arouses willingness of many countries to search for alternative reserve currencies and devise payment schemes independent from the US dollar,” Vladimir Putin stated. He added that Russia is unwilling to say farewell to the greenback. It is the US dollar which is “leaving” Russia.

The population grasped the point once the rumors appeared in summer. According to the estimates of the Bank of Russia, people have abandoned the idea of holding their savings in foreign currencies in domestic banks. To make things worse, if Washington imposes new sanctions and freezes Russian accounts in US banks, this decision will pose a threat to Russia’s gold & forex reserves denominated in US dollars.