Uday Kotak, the CEO of Kotak Mahindra Bank, a financial institution grounded in India, newly expressed his perspective on the dominance of the U.S. dollar in global financial markets. Kotak said that the U.S. dollar has “ disproportionate power ” as a reserve currency, retracting his prior statement in which he referred to the currency as the “ biggest financial terrorist in the world. ” Kotak simplified that several nations were researching alternative reserve currencies to reduce their reliance on the U.S. dollar.
Topmost Indian Banker Refers to the Dollar as ‘Biggest Financial Terrorist’ in the World
Uday Kotak, CEO of Kotak Mahindra Bank, an institution that registered more than $8.5 billion in revenue in 2023, referred to the subordination that world markets have to the U.S. dollar hegemony. In a committee at the ET Corporate Excellence Awards, an event of the Indian news conglomerate Times network, Kotak phrased that the American currency was “ the biggest financial terrorist in the world, ” criticizing the power it had as a reserve currency.
Explaining his stance, Kotak announced:
All our money is in nostro accounts and somebody in the U.S. can say- you cannot withdraw it from tomorrow morning- and you are stuck. That is the power of the reserve currency.
This reliance is what's running several countries of the world to seek an alternative reserve currency, Kotak noted, stating this was a “ crucial time in world history. ”
Still, Kotak thereafter corrected these statements on social media, simplifying he wanted to produce a source to the ‘ disproportionate power ’ the currency had in world markets. He clarified:
In a recent discussion on US dollar I inadvertently used words “financial terrorist” which I would like to correct. What I meant was that a reserve currency has disproportionate power, whether it is nostro account, 500 bps rate increase, or emerging countries holding dollars for liquidity.
The Run to Retain the Next Reserve Currency
Global geopolitics and the upgrading of sanctions against Russia have changed the landscape of how payments are being settled and which currencies are being utilized. China has newly made advancements in profiling the Chinese yuan as a friendly token for international markets, with Russia similarly upgrading it.
On the other nations that might come holders of the coming reserve currency, Kotak said:
“I don’t think Europe can, because it is the disunited states of Europe. I don’t think UK or Japan have the heft to be taking that position, though both the British pound and the yen are free currencies. China, I think, has a major issue of trust with many many countries around the world.
Still, Kotal believes that India can retain a shot at making the Indian rupee the coming U.S. currency, but it'll take ten years, during which the country will have to make strong institutions and a framework behind it.
India has preliminarily opened its doors to different nations to settle cross borders payments with the Indian rupee, as part of its most recent foreign trade policy guidance, with the objective of allowing countries facing a dollar crunch to keep trading goods.
(Sergio Goschenko, Bitcoin.com, 2023)