Q.3 How the sanctions on Russia could affect the position of the US dollar as the world’s reserve currency? (10 Marks)

Mentor’s comment-
  • https://indianexpress.com/article/opinion/columns/why-de-dollarisation-is-imminent-us-dollar-russia-7823308/
  • In the intro, mention the sanctions on Russia in the wake of the invasion of Ukraine.
  • In the body, mention the efforts by the central banks to diversify their reserves away from it to other assets or currencies like the Euro, Renminbi or gold. Also, mention the efforts by Russia and China. Also, mention the persistent dominance of the dollar as a reserve currency and use of it in international trade.
  • Conclude by mentioning that despite triggers to the move away from the dollar, in reality, it will be a protracted process. Apart from the Euro and gold, most other foreign currencies have some inherent risks associated with them.
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