The unprecedented step would push countries to use alternative currencies, Robert Shiller has warned
The dollar’s standing as a reserve currency would be jeopardized if the West confiscates frozen Russian assets to aid Ukraine, Nobel Prize-winning economist and Yale University professor Robert Shiller said in an interview with Italian news outlet La Repubblica published on Sunday.
According Shiller, seizing the assets would give the global community, especially countries which, like Russia, “convert their savings into dollars and thus entrust them in the reliable hands of Uncle Sam,” grounds to doubt the US currency.
“If America does this to Russia today… then tomorrow it can do this to anyone. This will destroy the halo of security that surrounds the dollar and will be the first step towards de-dollarization, which many are increasingly confidently leaning toward, from China to developing countries, not to mention Russia itself,” the economist warned.
“I can’t convince myself that this [confiscation of Russian assets] is the right way,” he explained.
“In addition to the fact that this will be confirmation for the Russian leader that what is happening in Ukraine is a proxy war, it could paradoxically turn against America and the entire West,” Shiller explained, adding that the situation would likely turn into “a cataclysm for the current dollar-dominated economic system.”
Overall, he said that while he sees some moral ground for using Russian assets to aid Ukraine, there is too much risk and “too many unknowns” with regard to the impact of such an action.
Shiller is known for his research in financial markets, financial innovation, behavioral economics, macroeconomics and real estate. In 2011, he was named one of Bloomberg’s ‘50 Most Influential People’ in Global Finance, and in 2013, he received the Nobel Prize in Economics for his empirical analysis of asset prices in 2013.
The EU, US, and their allies have frozen roughly $300 billion of Russian foreign exchange reserve assets since last year as part of a sanctions campaign over the Ukraine conflict. Western nations have been mulling ways to use the funds to aid Ukraine for the better part of a year. While no specific plan has so far been finalized, last week’s media reports indicated the US recently stepped-up discussions on the matter with its allies. Washington reportedly wants to “legalize” the confiscation of Russian assets by recognizing Western countries as injured parties in the Ukraine conflict.
Russia considers both the initial freezing of its assets and plans to confiscate them unlawful. Speaking to reporters last week, Kremlin spokesman Dmitry Peskov warned that any country considering the move should understand that it would face an immediate mirror response from Moscow.
For more stories on economy & finance visit RT’s business section
You can share this story on social media: