HO CHI MINH CITY, Vietnam — Exchange-rate swings stemming from Europe's debt crisis have highlighted the risks of holding existing reserve currencies, and more alternatives are needed, VTB Group chief executive Andrei Kostin said Sunday.
The euro has slumped 16 percent this year and last week sank below $1.20 for the first time since March 2006 after Greece last month tapped a 750 billion euro ($913 billion) emergency-loan package put together by the European Union and the International Monetary Fund.
"The recent financial instability shows, if not the complete failure of currencies like dollars and euros, … the threats which are existing in the present financial system," Kostin said at a news conference ahead of a World Economic Forum meeting in Ho Chi Minh City. "It led to more discussions of whether we would move to more reserve currencies."
Russia and China are increasingly settling cross-border trade in their own currencies rather than dollars, Kostin said.
Berlin and Moscow agree that a stable euro is key for global financial stability and sustainable economic growth, German Chancellor Angela Merkel and President Dmitry Medvedev said Saturday.
Medvedev said he was confident that the EU would be able to cope with its problems and hoped that the euro zone would remain stable.
"It is important for the euro zone itself, for partners such as Russia and … for the global financial system," he said. "If today, you remove this pillar from the global financial system, I'm afraid the consequences will be worse than when the crisis started in 2008."
(Reuters)