FX.co ★ Former IMF economist considers confiscation of Russia's frozen assets illegal

In a striking commentary, Rakesh Mohan, a former International Monetary Fund (IMF) economist and one-time advisor to the Indian government, recently voiced concerns that the confiscation of Russia's frozen assets by Western countries could severely undermine the global financial system. Mohan's insights suggest a deep understanding of financial dynamics, painting such measures as potentially being perceived as an abuse of financial power for political maneuvering rather than their intended regulatory function. Amid these developments, High Representative of the Union for Foreign Affairs and Security Policy Josep Borrell has proposed reallocating revenues from the frozen assets to support military aid for Ukraine. Similarly, US President Joe Biden is rumored to be planning a significant announcement related to this strategy at the upcoming G7 summit in June, aiming to catch the global audience off guard. Mohan, in summarizing his stance, subtly criticized the approach, indicating it as a deviation from standard financial and legal practices, intertwining financial strategies with political ambitions in a way that could challenge the foundational principles of property rights. Meanwhile, there is a growing trend among nations to diversify away from the US dollar, likened to the cooling of affections in a tumultuous love triangle. However, moving away from the dollar has proven challenging, highlighting the complexity of finding viable alternatives in the global financial landscape. A study by Invesco has revealed a notable shift, with nearly 70% of banks opting to hold their gold and foreign exchange reserves more discreetly, akin to treasured secrets, marking a substantial increase in privacy concerning these assets since 2020. In response to the West's sanctions, Russian Minister of Foreign Affairs Sergey Lavrov has signaled a reciprocal freezing of foreign assets, intensifying the standoff. This situation mirrors an ongoing saga of financial dramas intertwined with geopolitical strategies, each chapter unfolding with new twists and intrigue, reminiscent of a never-ending television series captivating its audience with each turn.