Ed Bentley

The world needs more reserve currencies and one of these should be the rouble, President Dmitry Medvedev reiterated in an interview on Tuesday, banging the drum for one of his favourite policies, aimed at boosting Russia's financial muscle internationally.

While covering problems in the Russian economy he also criticised the response to the crisis in the US, in particular the dominance of the dollar.

"May be in case the United States government had countered these problems in some other way, the downturn, the crisis would not have been so deep now," Medvedev said in his interview on CNBC, the transcript of which was published on the Kremlin website.

Without elaborating further on US policy, he warned that unless the international financial system was modified there would be another crisis in five or 10 years.

"Therefore, our task for the nearest future, as I see it, is to create more reserve currencies," said Medvedev. "One of such reserve currencies could possibly be the Russian rouble - as a regional reserve currency."

Russia has decreased the share of dollars in its foreign exchange reserves, the third biggest in the world, and Medvedev's comments appear to follow the trend of reducing the importance of the dollar.

"There is a political drive to replace the dollar from its international reserve status," said Vladimir Osakovsky, an economist at Unicredit.

Russia is likely to seek the support of the other BRIC countries when they countries meet in Yekaterinburg on June 16 and already claims to have won the support of the Chinese.

One suggestion is for the IMF's special drawing rights to become an international reserve, because finding a currency to challenge the dollar is unlikely in the short-term due to the political and economic clout wielded by the US.

"Basically the euro is the only currency potentially able to replace the US dollar but I don't think they are very interested," said Natalya Orlova, chief economist at Alfa Bank.

Russia's economic problems during the economic crisis, with a heavy fall in GDP predicted and the controlled devaluation last year, make the rouble unsuitable to act as a reserve, she said.

"To benefit from the capital inflow you have to build a competitive economy that wouldn‘t suffer from an appreciation of the exchange rate, which is not the case now," said Orlova.

A more viable competitor to the dollar in the long term is the Chinese yuan, due to the strength of the Chinese economy and its continued growth during the crisis. The BRIC group now produces 15 per cent of the world's output and, with large currency reserves, the political will to challenge the dollar is growing.

A more realistic option for Russia is to become a local reserve currency, particularly for CIS borrowers such as Belarus and Kazakhstan.

"Russia wants to give credit in roubles and not dollars," said Elena Sharipova, senior economist at Renaissance Capital.

Sharipova added that becoming a regional reserve currency would be possible in the next three to five years and had been one of Medvedev's goals since coming to power.

"It is his goal to create an international financial centre in Moscow," Sharipova said. "Regionally it is possible with Russia's huge foreign reserves."