"I genuinely feel that the biggest financial terrorist in the world is the US dollar. All our money is in nostro accounts and somebody in the US can say — you cannot withdraw it from tomorrow morning — and you are stuck. That is the power of the reserve currency," Kotak said at a panel discussion at the ET Awards for Corporate Excellence 2023 in New Delhi.
On Sunday, he said on Twitter that he "inadvertently" used words "financial terrorist," explaining that his comment meant "that a reserve currency has disproportionate power, whether it is nostro account, 500 bps rate increase, or emerging countries holding [US dollars] for liquidity."
During his speech at the panel discussion, Kotak also said that the world is now "desperately looking for an alternative reserve currency," noting that the time is ripe for the Indian rupee to take this position. The country should start by building "a strong framework that is not dependent on the whims and fancies of anyone" and prepare that it may take as many as 10 years to achieve the goal.
The veteran banker also cast doubts on the prospects of Europe, the United Kingdom, Japan or China to replace the US dollar as a reserve currency.
In early November 2022, the Indian government allowed international trade settlements in rupees to promote exports. The country's ministry of commerce and industry said that the amendments were made to facilitate and simplify international trade transactions, considering the growing interest in the internationalization of India's national currency.