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Powell acknowledges Russia sanctions could rev China plan for alternative to dollar-centric banking

U.S. lawmakers fear China is learning all the wrong lessons from Vladimir Putin's recent invasion.

Published: March 4, 2022 11:12am

Updated: March 4, 2022 1:08pm

Federal Reserve Chairman Jerome Powell is acknowledging that China could accelerate its plans to create an alternative to the global dollar-standard payments system – amid the crippling sanctions the U.S. and other Western nations have imposed on ally Russia for invading Ukraine. 

Powell made the prediction Thursday at a Senate hearing when asked for a response to a series of related statements by Rhode Island Democratic Sen. Jack Reed, chairman of the chamber's Armed Services Committee, according to the Epoch Times.

"I think the Chinese are particularly interested in the fact that we’ve been able to assemble a global coalition to basically shut down the Russian economy," was one statement by Reed, who also asked Powell to keep Congress apprised of the matter. 

"And they will start thinking about how they can avoid that fate if they get into similar circumstances,” the senator continued, while also saying China will now be looking very closely at "the whole issue of the dollar as the medium of exchange to the world."

Powell responded: "Yes to all of the above" and pointed out that China had already been working on an alternative to the SWIFT international payments system, from which several Russia banks were banned Feb. 26 in response to the Ukraine invasion.

Powell said that China's efforts have "been going on for some time" and acknowledged the Russian invasion and subsequent global economic response "may change the trajectory" of China's work, the Epoch Times also reported.

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