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The IMF warns that financial sanctions on Russia could affect the supremacy of the US dollar. “War will also stimulate the adoption of digital finance”

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Russia faces a host of sanctions from the United States and its allies following the February 24 invasion of Ukraine.

“The dollar will remain a major global currency even in this context, but fragmentation at a lower level is certainly quite possible. Some countries are already renegotiating the currency in which they receive payments for trade,” Gopinath said.

The official added that the war will also stimulate the adoption of digital finance, from cryptocurrencies to stablecoins (stable currencies) and central bank digital currencies (CBDC).

Wider use of other currencies in world trade will lead to further diversification of central bank reserves, Gopinath said.

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Earlier, the official said that sanctions imposed on Russia would not affect the dollar’s status as an international reserve currency and that the war in Ukraine would slow the growth of the world economy but would not lead to a global recession.

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