Putin’s Vision for a Decentralized Global Economy

May 26, 2023

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While Putin speaks of a decentralized global economy, he is working on increasing his and Russia’s influence.

Putin Believes Decentralization Will Help Global Economy Be More Resilient

Russian President Vladimir Putin that decentralizing the finance system can strengthen the global economy and enhance its ability to withstand crises. During the second Eurasian Economic Forum, Putin emphasized the importance of building a decentralized financial system to depoliticize the global economic arena.

stated: “Of course, the stability of all global finances will largely depend on this decentralization. The more de-centralized it is the better for the global .”

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Payments Decentralization

One aspect of the decentralized financial system involves reducing reliance on the U.S. dollar and transitioning to national currencies for international settlements. Russia has been leading efforts to reduce the share of the U.S. dollar in its international transactions by using currencies such as the Chinese yuan and other national currencies. Many other countries, including China, India, and Latin American nations, are also embracing this shift.

Russian Think Tank Proposes BRICS Bank as IMF Alternative

The Roscongress Foundation, a Russian think tank, suggests that the New Development Bank (BRICS bank) could serve as an alternative to traditional financial institutions like the International Monetary Fund (IMF). The report highlights the possibility of securing loans based on energy-exporting capabilities, similar to the IMF’s Special Drawing Rights (SDR) asset.

A Shift to an Alternative Financial System

Experts in Russia see the BRICS bank as a natural alternative to the current U.S. dollar-dominated financial system. They argue that such alternatives are necessary to avoid unilateral economic sanctions imposed by the United States. The growth potential of the economies within the BRICS bloc and the discussion of a common currency further accelerate this shift.
Sergey Chevrychkin, a Russian financial analyst, believes the world will flee to these alternatives due to fear of also facing these unilateral measures. He stated:

I believe that in the long run, these measures will destroy faith in the transnational protection of property rights and weaponize the global financial system.

Global Economy to Benefit from Decentralized International Financial System

A decentralized international financial system would increase the security of global payments and the overall economy. Putin emphasized the need to coordinate efforts to establish this new system and reduce dependence on countries with global reserve currencies. The goal is to create a depoliticized economic environment.

Conclusion

Putin’s vision for a decentralized global economy aims to enhance resilience, depoliticize economic interactions, and reduce dependence on a single dominant currency. By embracing decentralization and shifting to national currencies, countries can strengthen their economic systems and protect themselves from potential crises. The proposal to use the BRICS bank as an alternative to traditional financial institutions aligns with the goal of establishing a more balanced and inclusive international financial system.

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