Following the approval of the government, Kazakhstan's Central Bank has announced it plans to de-dollarize its economy by the end of 2016. The goal is to avoid the macroeconomic instability that the USD creates and to give priority to Tenge in trade agreements (banning price designations in foreign exchange). Coming just 2 weeks after the ratification of the $100 billion BRICS bank, and Russia's creation of a SWIFT-alternative, one wonders - as one by one foreign nations agree non-dollar trade and swap agreements - who is becoming 'isolated' now?
The Tenge is at record lows against the USD...
Full Zazakhstan Central Bank Statement (via Google Translate):
On measures to reduce dollarization of the economy
March 4, 2015 in Almaty
National Bank jointly with the Government to develop a plan to reduce the level of dollarization of the economy of Kazakhstan for 2015 - 2016 years, which was approved at a meeting of the Government of February 17, 2015. In addition, the plan approved at the meeting of the Board of the National Bank February 25, 2015.
The plan includes three main strategic directions:
- Ensuring macroeconomic stability;
- The development of non-cash payments and reduce the shadow turnover;
- Priority over foreign currency.
In the first direction in the plan includes measures to diversify the economy and increase the local content in goods, works and services.
The second area includes measures for the development of non-cash payments.
In the third direction is provided to increase the size guarantee on deposits in the national currency with 5 million. Tenge to 10 million. Tenge, reducing interest rates on deposits in foreign currency up to 3% annual, providing liquidity to banks and recovery of the banking sector, a ban designation on prices in foreign currency (including in arbitrary units).
Reducing the level of dollarization of the economy is a long process, whose progress is possible with constant and systematic work with a set of interrelated measures and joint efforts not only of the Government and the National Bank, but also of all economic actors.
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With China's earlier statement and now this, today is not a great day for the US reserve currency's future. Just as the dollar emerged to global reserve currency status as its economic might grew, so the chart below suggests the increasing push for de-dollarization across the 'rest of the isolated world' may be a smart bet...