ECB Chief says US dominance dwindling as world becomes 'multipolar'

By Al Mayadeen English
Source: Agencies
18 Apr 2023 16:05

The European Central Bank chief Christine Lagarde stresses that there will be "first-order implications” for central banks as the world becomes more multipolar.

The President of European Central Bank, Christine Lagarde, attends a press conference following the meeting of the banks governing council in Frankfurt, Germany, Thursday, Feb. 2, 2023. (AP)

The European Central Bank's President Christine Lagarde, said during a speech to the Council of Foreign Relations in New York that the world "may be becoming more multipolar."

Lagarde warned “We are witnessing a fragmentation of the global economy into competing blocs, with each bloc trying to pull as much of the rest of the world closer to its respective strategic interests and shared values,” adding, “And this fragmentation may well coalesce around two blocs led respectively by the two largest economies in the world.”

According to the chief, "tectonic plates of geopolitics are shifting faster” and this new “global map” would have “first-order implications” for central banks. Lagarde also mentioned the Covid-19 pandemic, the war in Ukraine, the "weaponization" of energy, and the China-US rivalry as causes for the global order shift.

The ECB chief said China became a challenge for US dominance after countries began seeking alternatives to "major traditional currencies for international trade”. As such, all countries that sought to diminish their dependence on the US found this time period as an opportunity "to reduce their dependency on Western payment systems and currency frameworks.”

However, Lagarde emphasized that despite all this change, it remained that the changes did not amount to "imminent loss of dominance for the US dollar or the euro”, but they do “suggest that international currency status should no longer be taken for granted.”

Lagarde noted that multipolarity can have a positive impact on Europe, asserting that "the multiplier effect of common action" in areas like industrial policy, defense, and investment in green and digital technologies will be "much higher" for member states, saying that it "raises the stakes for internal policy cohesion."

In addition, the chief noted it could be an opportunity to tack the "long-delayed projects" like integrating the capital market.

In conclusion, Lagarde stated that the EU needed to get ready for "the new reality" and quoted Ernest Hemingway saying, “Fragmentation can happen in two ways: gradually, and then suddenly.”

Russia, Africa to jointly build new world order: Putin

Russian President Vladimir Putin said African nations will become one of the main pillars and pioneers of the new world order, stressing that relations between Russia and Africa are developing to unprecedented levels, and Moscow aims to expand these ties.

Putin made the remarks addressing the 'Russia-Africa in a Multipolar World' plenary session as part of the second Russia-Africa International Parliamentary Conference held on Monday, which is attended by representatives of over 40 African countries.

"African states are constantly increasing their role in world affairs. More and more confidently declare their position in politics and economics. We are convinced that Africa will become one of the leaders of the emerging multipolar world order," he said.

Despite only accounting for 3% of world GDP, African countries are witnessing exponential economic growth, Putin noted, adding that Russia aspires to reach a strategic partnership with the African nations to jointly transition the current global affairs into the new world order.