November 15, 2024
IMF-Nigeria

Sanctions imposed by Western countries against Russia could lead to fragmentation of the global financial system and dilute the US dollar’s dominance in it, Gita Gopinath, the IMF’s first deputy managing director has warned.

The official considers that radical restrictive measures imposed by Western countries after the launch of Russia’s special operation in Ukraine may contribute to the emergence of small currency blocs based on trade between certain groups of states.

“We are already seeing that with some countries renegotiating the currency in which they get paid for trade,” Gopinath told The Financial Times on Thursday.

“The dollar would remain the major global currency even in that landscape but fragmentation at a smaller level is certainly quite possible,” she noted.

On February 24, Russian President Vladimir Putin announced a special military operation in response to a request for help by the heads of the Donbass republics. He stressed that Moscow had no plans of occupying Ukrainian territories, but aimed to demilitarize and denazify the country.

Following this step, the United States, the European Union, the United Kingdom and several other countries announced sanctions against Russian individuals and legal entities.

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