De-dollarization in Russia is gaining momentum. Its striking evidence was the recent loud announcement of the Minister of Finance Anton Siluanov that the funds of the government “money box” – the National Welfare Fund – will no longer be kept in dollars. They will be converted into other currencies (euro, pound, yuan), as well as gold. For example, for Russia, the gradual abandonment of the dollar is largely a forced measure: our country, due to geopolitical reasons, lives under the sword of Damocles of the sanctions threat emanating from the United States. And Washington can strike the main blow just at the dollar assets under its control, which belong to Russia. On the part of Moscow, it is logical to bring them to a minimum or even to zero them altogether.
But something else is surprising: de-dollarization is being talked more and more insistently in America itself. Overseas, they are again discussing the possibility of introducing the amero currency instead of the dollar – a single means of payment for all states of the continent, including not only the United States, but also Canada and Mexico. We are talking about a certain North American analogue of the common European currency, the euro.
History with geography
It would seem, why does America need this – after all, the dollar, which has the status of the world reserve currency, is almost the main trump card of this country, asserting its world leadership. The dollar is respected all over the world, and its “printing press” is in the hands of the US administration: what else can you dream of?
But this picture, which is good for Washington, has a reverse, unattractive side. Over the long decades of almost uncontrolled switching on of the aforementioned “printing press”, the United States has acquired a fantastic national debt of $ 28 trillion – which is equal to 102% of GDP. In other words, in order to close this debt, the American economy will have to work only on it for more than a year.
Moreover, according to the estimates of American financial experts, only 4% of the dollar money supply is provided by the US gold and foreign exchange reserves. The rest – by the word of honor of the government (which, in fact, was mired in debt) or deflated assets of local financial corporations.
Meanwhile, as you know, sooner or later you have to pay off the debts. The US authorities have so far successfully postponed the “hour of reckoning” for the future, but this cannot continue indefinitely. And there is nowhere to take the necessary trillions – this is fraught with a complete default of the American economy. Hence the “creative” idea arose – to take and nullify all the accumulated debt at once by abandoning the dollar itself and replacing it with amero. This idea did not come to the heads of the representatives of the American establishment yesterday.
The story began with the summit of the leaders of the United States (then it was George W. Bush), Canada and Mexico, which took place in 2005 in Texas. There, the idea of creating the North American Union and the transition within its framework to a single currency was expressed, and two years later it was developed at a similar meeting of the leaders of the three countries, already in a renewed composition and in another place – in Quebec. According to the concept, “amero” was supposed to be officially introduced first in the countries of North America, and then to expand the area of action of the new currency to South America.
The theme sounded with renewed vigor during the first American and then the global financial crisis of 2008. Only this time it was not an official diplomatic, but a scandalous revelatory character. The unrest was initiated by independent American journalist Harold Charles Turner, who that year posted an article on his website about the “conspiracy theory” of the three governments. Allegedly, they will all give up their currencies in favor of a common one – amero. Thus, they will nullify all their debt obligations and, along the way, “throw” the whole world: after all, 75% of all world transactions are in dollars. Roughly speaking, the US authorities can set the rate of the amero to the dollar in the ratio of 1 to 10. Accordingly, the investments of all countries in dollars will depreciate by an order of magnitude, warned the reporter-whistleblower.
Either the powers that be were influenced by the wave of indignation that arose then not only in America, but also in the world, or they really did not have serious plans in this regard, but the topic of the introduction of amero disappeared from the information field for a long time. And what chances did it have of being raised, say, under the presidency of Donald Trump, who was going to fence off Mexico with a wall, and not introduce a single currency with it?
But times have changed, and under the “traditionalist” Joe Biden, the integration theme (naturally, under the American leadership) returned to Washington’s political agenda. And they remembered the project amero again. Moreover, the US national debt has not only not disappeared anywhere in recent years, but, on the contrary, has grown quite noticeably. This is explained, first of all, by the emergency expenses of the American government to overcome the economic crisis that was caused by the pandemic. Moreover, according to the calculations of the Budget Office of the US Congress, at the current rate of its growth, by 2051 the national debt will almost double more and reach 202% of GDP. Consequently, the question arises again about its “zeroing” in one way or another.
Five currencies for the whole world
The emergence of amero is fully in line with the global trend towards the consolidation of currencies. If now there are more than 100 recognized world currencies, then by 2040-2050 there may be 5-6 of them. This idea was expressed by the Minister of Economy of Brazil, Paulo Guedes, at the last dockyard World Economic Forum in Davos – in January 2020. According to him, a successful example of a single European currency, introduced into circulation at the turn of the 20th and 21st centuries, has every chance of spreading to other continents. As an example, Guedas cited China, which over time may include the Philippines and Malaysia in the common currency zone, where more than 200 million Chinese live, work and trade in yuan.
By the way, there was a period in the 2000s, when there was quite active talk that a new currency could appear in Russia instead of the ruble. It was then also about the unification of three neighboring states into a single economic space – Russia, Kazakhstan and Belarus, and the introduction of a single means of payment in them, for which they even came up with a name – altyn.
Of course, the pandemic that happened last year and the massive closure of borders very much “dampened” globalization sentiments, including in the financial world, but it hardly put an end to them forever.
Of course, there are enough skeptics, including about the prospects of the Amero. Some Russian experts are convinced that the economies of Canada and Mexico, deeply integrated with the US and heavily dependent on it, will not be able to significantly add weight to the new currency. “Canada and Mexico will not be able to help the United States, and the Amero is unlikely to be stronger than the dollar,” said Alexei Mamontov, president of the Moscow International Monetary Association. – In any case, the new currency will be weaker than the euro and will not compete with it. And in general, the effect of the introduction of amero, most likely, will not be any ”. According to the expert, even three of the geographical neighbors will not be able to significantly raise the exchange rate of the common currency.
“The ruble is a weak and volatile currency”
All aspects related to the introduction of the amero instead of the dollar and the possible impact of this event on the Russian national currency, “MK” discussed with the well-known financial analyst Alexander Razuvaev, head of the IAC “Alpari”.
– They have been talking about the single currency of North America for 15 years, but the project has not been implemented. What are the chances of its implementation now?
– The idea of a single currency for the United States, Canada and Mexico became very popular in 2008 during the Lehman Brothers crisis. Various left-wing economists and just haters of capitalism then started talking about the fact that the crisis would bury the world market system and globalization. However, one must perfectly understand that globalization is a logical consequence of the development of financial, transport and information technologies. Capitalism has triumphed all over the world. And better than capitalism in the foreseeable future, humanity is unlikely to come up with something.
Coming back to your question: In 2009, Obama and his team of very professional economists saved the global economy with a printing press. Including Russia – freshly printed dollars were returned to a comfortable oil price level for the Russian budget.
The status of the dollar as a reserve currency in the world suits everyone, except for countries that are forced to abandon it for political reasons. For example, Russia or Iran. Although the dollar also has weaknesses.
According to information from the business community, the United States is facing the problem of a possible breakthrough of the giant money supply issued by the Federal Reserve System in 2019-2021 from the virtual to the real sector of the economy. This threatens to explode the entire operating credit and financial system due to price imbalances and a rapid decline in the purchasing power of the dollar. So far, however, everyone believes that Biden and his administration will cope with this. In any case, if amero does appear, it will not be today or tomorrow.
– Is it possible to draw analogies between the amero for North America and the euro for Europe?
– The euro was conceived as an alternative to the dollar. Even the economies of the leaders of the European Union – France or Germany – are much smaller than the US economy. However, the euro did not become a real alternative to the dollar. The reason is simple – there is one currency, but there are many countries. Each has its own economy, its own governments and its own national interests. Suffice it to recall how much effort and money was spent on saving Greece from sovereign default after the 2008 = -2009 crisis.
By the way. the transition to the euro is not always a plus. The Baltic countries switched to the euro, but this did not bring them joy. Salaries remained the same, but prices were like in Berlin. But Poland has retained its currency, and hence its sovereign monetary policy. And now it has every economic reason to be a regional power.
– At one time there was a project to create a single currency for a number of CIS countries (Russia, Belarus, Kazakhstan). Is it realistic in the near future to see a new currency in place of the ruble and does our country need it?
– Yes, a new currency was also proposed for the countries of the Eurasian Economic Union (EAEU). First of all, for the core – Russia, Belarus and Kazakhstan. In 2012, she was given the name “altyn”, which successfully took root. A reference to the financial system of the Golden Horde, created by the Chinese and the Persians, which in the 13th and 14th centuries was the best in Eurasia. However, after 2014, Russia found itself under sanctions, there was a two-fold devaluation of the ruble. Today the ruble is a weak and volatile currency, with low confidence in both Russia and the CIS. Everyone understands that the economy of the Russian Federation is much larger than the economies of Belarus and Kazakhstan, so the altyn will look like the Russian ruble. The idea of a Eurasian currency has been shelved. But we must understand that without a single currency no Eurasian integration will be possible – it is impossible to create a single market for goods, services and capital.
– Do you share the idea that in 20-30 years there will be 5-6 currencies in the world? Could the world split into multiple currency zones?
– If for some reason a global crisis occurs and the dollar loses its reserve status, then it is very likely. Definitely, there will be a single Latin American currency, center – Brazil. The single Asian currency is the center of China. Turkey and Azerbaijan can offer a common currency for the countries of the Turkic world. Baku is an important creditor to Ankara. However, the Turkish lira is now one of the worst world currencies.
It is probably worth considering the idea of a Eurasian currency again. It will have to unite Russia, Belarus, Kazakhstan, as well as Iran and Uzbekistan, their entry into the EAEU is being actively considered.
At the same time, one must understand that regional currency zones are not the final stop. Humanity will sooner or later come to a single government and world currency. The latter is likely to be either directly pegged to gold or to securities backed by gold. I would not be surprised if, in the end, Russia and China come up with this initiative.
– If we assume that amero will become a reality, will it be beneficial for Russia and how does it threaten ordinary Russian citizens who are accustomed to saving in dollars?
– Yes, such a scenario poses a threat to the cash currency accumulated by the Russians. If Washington nevertheless introduces amero, it will have to exchange dollars for new banknotes. Citizens of the USA, Canada and Mexico will surely get amero in a ratio of one to one, and for “bad guys”, for example, Russians, the exchange can be made at a rate of 1 to 10 or 1 to 100. Therefore, returning to today’s reality, I can say : The geopolitical risks of investing in the dollar are very high for the Russian government, and for companies, and for ordinary citizens.
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