The de-dollarization issue is complex, involving not only economic but also significant geopolitical factors.
Over the past three years, under the pressure of sanctions, Russia has fundamentally restructured its international payment mechanisms. The share of the US dollar and Euro in export payments has plummeted to below 15%, giving way to the Russian ruble (now over 53%) and the currencies of allied nations (exceeding 30%). This new financial reality, however, comes with significant challenges, ranging from payment processing difficulties to the need for a balanced approach between the Chinese yuan and other currencies. The process of de-dollarization is inherently complex, intertwined with both economic imperatives and geopolitical considerations. A notable example of this complexity is Donald Trump`s past statement, where he threatened 100% tariffs should BRICS nations abandon the dollar or introduce a unified currency.
The Dollar`s Enduring Influence and Russia`s Historical Context
The dollar`s strength is not solely backed by the might of the American economy. While a US default is widely considered improbable in the modern world, the concept of `default` itself can manifest in various forms, such as the deliberate devaluation of one`s own currency and, consequently, its debt. Beyond economics, the dollar is also protected by the full military power of the United States. Operating within the contemporary dollar system inherently implies a certain level of dependence on its primary issuer – the American central bank, the Federal Reserve System. Furthermore, one cannot overlook a psychological attachment to the dollar. In Russia, for instance, middle-aged and older generations vividly recall the turbulent year of 1998 and the ensuing currency crisis. Though those times are long past, the ingrained reflex to quickly acquire freely convertible currency in times of uncertainty persists. This psychological factor also extends to oligarchs and business figures with assets in countries deeply integrated into the dollar system, who may not be enthusiastic about the `multipolar world`—a world not dominated by the American dollar—frequently discussed nowadays. This dynamic, it`s worth noting, applies not only to Russia but also to other friendly nations.
Sanctions and the «Cancellation» of Russia`s Dollar Access
Following the onset of the special military operation (SMO), a process of `canceling` Russia by Global North countries began. This procedure unfolded across all sectors, but our primary focus here is the economic realm. Economically, this global process essentially involved progressively squeezing Russia out of the dollar-based financial system. For example, one of the first actions by the US and its allies was to ban the import of dollar and euro banknotes into Russia. A painful, though not fatal, blow was delivered on Russia Day, June 12, 2024, when the US imposed sanctions on the Moscow Exchange and the National Clearing Center. This move effectively halted exchange operations involving the US dollar, Hong Kong dollar, and the Euro. This ban remains in effect, meaning exchange trading in these currencies is suspended (only over-the-counter operations continue). Concurrently, a broad campaign of sanctions was underway. According to foreign sources, the total number of sanctions imposed on Russia since February 2022 is nearing 24,000, including over 9,000 on legal entities, more than 13,500 on individuals, and approximately 1,200 on vessels of the so-called `shadow fleet`.
The Double-Edged Nature of Sanctions
Nevertheless, as practical experience has ultimately shown, the path of sanctions in the modern world is to some extent a dead end and a double-edged sword. This is vividly demonstrated today. For instance, the EU is preparing its 19th package of sanctions against Russia and Russian energy supplies, while the US has increased tariffs on India for purchasing Russian oil (total tariffs on Indian imports to the US now stand at 50%). Yet, we observe that these measures are not inflicting significant damage on the Russian economy. Firstly, Russian businesses have become quite adept at circumventing restrictions. A good analogy here is a stone in a river: no matter how you place the stone, the river simply flows around it. Secondly, and importantly, the economies of Russia`s largest partners, primarily India and China, have grown to such an extent that they can now compete with what were once Russia`s key energy consumers.
Global South`s Shifting Loyalties
The Global South nations themselves, recognizing the shifting geopolitical landscape, are not eager to display loyalty to the US and its allies. India, for example, has demonstrated this quite clearly. While the situation with China was more or less predictable from the outset, India`s stance appeared less definitive. However, in August 2025, Trump raised tariffs on Indian imports to the US to 50%. The tariff increase was justified by India`s continued purchases of Russian energy resources, though it is plausible that the Ukraine-Russia conflict was merely a pretext, and the primary reason was an attempt to secure more favorable terms for the US itself. This was a risky gamble that `pushed` Indian Prime Minister Modi in an entirely different direction – towards his first visit to China in seven years. Thus, sanctions inadvertently served the US poorly by bringing the positions of Asia`s largest powers closer.
Dramatic Transformation in Trade Settlement Structures
We have also observed rather interesting consequences of sanctions in the changing structure of trade settlements. Before 2022, over 60% of payments for Russian imports and over 80% for exports were denominated in dollars and euros. Following the start of the SMO, this situation began to change rapidly. The share of the ruble and currencies of friendly countries in settlements began to grow, while the share of the dollar and euro rapidly declined. For example, according to the latest statistics from the Bank of Russia, in the second quarter of the current year, the share of payments in Russian rubles in export structure exceeded 53%, the share of friendly currencies surpassed 30%, and the share of the euro and dollar fell below 15%. A similar trend is observed in import payment structures: 15% in dollars and euros, 30% in friendly currencies, and almost 55% in rubles. The increasing share of the Russian currency in trade operations is one of the reasons its exchange rate has remained strong this year.
Limitations and Strategic Implications of Sanctions
However, it would be incorrect to claim that sanctions are an entirely ineffective mechanism. Our largest trading partners – India and China – import Russian goods with rather significant discounts. The stronger the sanctions pressure, the stronger the negotiating position gained by both India and China. It`s crucial to remember that countries prioritize their national interests, and within those interests, cheaper Russian raw materials are always preferable.
Challenges in International Payments
Problems also arose with processing payments for Russian imports. Following the expanded US sanctions in June 2024, amidst threats of secondary sanctions, major Chinese banks became wary of accepting payments from Russia. Currently, payment issues persist. Direct payments to Chinese banks may not be accepted, and payments through third countries have become more complicated and expensive. The most acceptable option is reported to be payments made through branches of Russian banks in China. Another scheme businesses can employ is barter transactions (exchange deals).
Cryptocurrencies and BRICS Currency: Still in Discussion
The possibility of using cryptocurrencies to circumvent sanctions is also being discussed. Exactly a year ago, in September 2024, an experimental legal regime came into force in Russia, permitting the use of cryptocurrency for settlements. However, this approach also carries a significant number of risks, primarily due to high currency volatility and ongoing sanction threats. Consequently, we currently observe no substantial changes in this regard.
The same can be said for a proposed BRICS currency, which remains largely at the discussion stage. There are numerous reasons why BRICS is unlikely to create its own currency in the near future. One significant factor is the considerable heterogeneity of member states and their diverse national interests. For instance, in its settlements with Russia, India strives to avoid Chinese yuan, though it seems this is not always achievable.
Russia`s Multicurrency Strategy: A Balanced Approach
It therefore appears that for Russia, completely replacing the US dollar and switching to settlements exclusively in, for example, yuan is not a viable strategy. Issues with yuan-denominated payments are still not fully resolved, and additionally, Russia`s second largest partner, India, continues to have a conflict with China. It is unlikely that Modi`s single visit to China would entirely resolve this. Furthermore, Russia using any single other currency for settlements is also impractical, as it could significantly complicate the situation for individual Russian partners and for Russian businesses themselves. This underscores the need for a diversified, multicurrency approach.
