After years of a de-dollarization strategy, Russia is planning to return to the U.S. dollar settlement system as a part of a wide-ranging economic partnership with the US.
In 2022, US banks seized Russian assets during the Russia-Ukraine war, which led to Russia adopting a de-dollarization strategy.
Not only this, but a lot of other countries also started moving away from dollar assets after the seizure.
But now, Russia is coming back, and here's everything that will happen under this new partnership:
Dollar Settlement: Re-entering the dollar-based financial system to facilitate international trade.
Energy Cooperation: Joint ventures in natural gas, offshore oil, and critical raw materials.
Sanctions Relief: The U.S. has reportedly considered a gradual lifting of sanctions to allow dollar transactions to resume.
Geopolitical Pivot: The plan could potentially weaken the current financial ties between Moscow and Beijing by reducing Russia's reliance on the Chinese yuan.
If this deal is finalized, brace yourself for a new change in the global economy.
🚨BIG WARNING: THE BIGGEST THREAT TO MARKETS IS BACK.
The probability of a US government shutdown this week has exploded to nearly 96%.
Last week, it was only around 18%.
And this is a serious liquidity risk for markets.
Democrats are saying that they will not let the spending bill pass until these demands are met.
• Mandatory body cameras for all immigration officers. • Banning the use of masks by agents during operations. • Ending "roving patrols" and tightening warrant requirements for entering homes.
Republicans have resisted these changes, arguing for strong immigration enforcement and defending the actions of federal agents
And here is the dangerous part: The debt ceiling has already been raised to $41.1 trillion.
That means politicians can afford to fight longer without instantly breaking government operations, which actually increases the chance of a prolonged shutdown.
Along with this, every key aspect of the US economy is breaking down.
Jobs market, retail spending, and corporate bankruptcies are all getting worse.
But why would markets suffer?
When a shutdown starts, the US Treasury usually rebuilds its TGA. To do that, it pulls money out of financial markets.
During October shutdown, the TGA increased by about $220 billion. That was a $220B liquidity drain from markets, and this led to a liquidity crisis.
If a shutdown happens again and continues for longer, the liquidity drain impact will be much bigger and could be brutal for the markets.
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