Steve Brown -- Can China Dethrone the US Dollar as Global Reserve

Can China Dethrone the US Dollar as Global Reserve

As a result of this ‘trade war’ China has let the yuan slide versus the USD which is a warning to Trump, specifically Mnuchin.

by Steve Brown

December 23, 2019

Submitted by Steve Brown…

On the US dollar as reserve currency, that is a tough thing to break especially for China since the yuan is not freely convertible. China has renminbi and yuan; one they peg to the dollar and the other is circulated in China. Try converting USD to yuan in Paypal for example?  The option is not there. Payments from the west to china sellers by Paypal (for example) are only in dollars.

It is a complex subject since China is the only foreign nation with a direct link into the US Treasury for purchase of US debt instruments, bypassing the Fed’s crooked relationship with its crooked primary dealers. This is done to manage China’s global trade relationships via the value of its currency which is somewhat pegged to the dollar (even if China and Trump claim otherwise) thus evading Federal Reserve gamesmanship. That’s why Trump messing with China is so dangerous, even if China has few options right now.

Les banques russes rejoignent le système mondial chinois de paiements alternatifs

SWIFT US : le début de la fin…

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Les banques russes rejoignent le système mondial chinois de paiements alternatifs 

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Par  Tyler Durden – Le 31 mars 2019 – Source ZeroHedge

En noir, or extrait en Russie, en rouge or acheté par la Russie

Alors que la Russie se débarrasseactivement de ses dollars américains et achète de l’or au rythme le plus rapide depuis des décennies, il n’est pas difficile de déchiffrer ce qui est écrit sur le mur pour savoir ce que le Kremlin pense de la possibilité d’une détente dans les relations douloureuses entre les États-Unis et la Russie.

Les réserves russes (en vert les Bons du Trésor US , en jaune l’or)

Et comme la Russie cherche maintenant clairement à mettre fin aux liens monétaires avec un « ouest » arrimé au dollar, il n’y a qu’une alternative : la Chine. C’est pourquoi il n’est probablement pas surprenant que plusieurs banques russes aient rejoint le système chinois de paiements internationaux (CIPS), également connu sous le nom de « SWIFT chinois », afin de faciliter les opérations entre les deux pays, selon un haut responsable de la Banque centrale de Russie (CBR).

The Beginning Of The End Of SWIFT: Russian Banks Join Chinese Alternative Global Payments System

by Tyler Durden

Sun, 03/31/2019 - 21:20Facebook

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With Russia actively dumping US dollars and buying gold at the fastest paced in decades, the writing is on the wall when it comes to what the Kremlin thinks of any possibility for a detente in the painfully strained US-Russian relations.

And with Russia now clearly seeking to end monetary ties with a dollar-denominated "west", there is just one alternative - China. Which is why it will probably not come as a surprise that several Russian banks joined the China International Payments System (CIPS) also known as China's "SWIFT", to ease operations between the two countries, according to a senior official at the Central Bank of Russia (CBR).

“As for the cooperation on payment systems, a range of banks are already connected to CIPS, allowing to facilitate payments routing procedure,” Vladimir Shapovalov, who heads a division dealing with foreign regulators at the CBR’s international cooperation department, said earlier this week during the international Russian-Chinese forum.

Meanwhile, as RT writes, the regulator hopes that in turn, Chinese counterparts will pay more attention to Russia’s own SWIFT alternative, the SPFS (System for Transfer of Financial Messages), as "it can further boost bilateral trade", the official added.

As RT adds, Russia has been actively demonstrating the SPFS network, which was created in 2014 in response US threats of disconnecting Russia from SWIFT, to foreign partners, including China after its export version was finished late last year. The first system transaction involving a non-bank enterprise, was made by Russian oil major Rosneft in December 2017. Some 500 participants, with major Russian financial institutions and companies, have already joined. And with Europe contemplating alternatives to SWIFT in order to keep funding the Iran regime in light of its exclusion from the dollar-based monetary system following Trump's reimposition of Iranian sanctions, it would land a major blow to the US Dollar's reserve status if Brussels announced that it, too, would be joining either the Chinese or Russian alternative to dollar hegemony, a process which based on reserve managers' declining allocations to US dollars...

... is already taking place.

Russia goes for gold, drops US dollar, amid rising tensions

With geopolitical tensions on the rise, the incentive to invest in the American dollar is much less attractive that it used to be

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 55 mins ago 

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 July 29, 2018

By

 Frank Sellers

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Russia’s reserves of the U.S. dollar have been on the wane as of late. Russia isn’t investing American currencies or American debt, but is choosing to put its money into something with a more diverse portfolio of uses, like gold, for instance. Russia’s reserves of U.S. dollars are down to $14.9 billion in May from $96.1 billion in March, while increasing its gold reserves by over 100 tons since the beginning of the year. With geopolitical tensions on the rise, it only makes sense, and since much of those tensions are with the Americans, the incentive to invest in the American dollar is much less attractive that it used to be.

Nasdaq reports:

Russia‘s U.S. dollar reserves have shrunk from $96.1 billion in March to just $14.9 billion in May, according to the Russian Central Bank. Its governor, Elvira Nabiullina, says the decision will help protect the Russian economy and diversify the bank’s reserves.

Back in March, Russian President Vladimir Putin called the monopoly of the U.S. dollar “not reliable enough and dangerous for many”.

Notably, the Bank of Russia has been buying gold every month since March 2015, overtaking China as the fifth-biggest sovereign holder of gold.

Russia added 500,000 ounces of gold (15.55174 tons) to reserves in June and bought some 106 tons of gold since the start of the year, with total reserves now approaching the 2,000-metric-ton mark. Last year, Russia added a record 224 tons of gold to the reserves.

The U.S. is still the largest owner of metal, followed by Germany–8,134 and 3,374 tons, respectively.

Russia to Europe: Let’s trade in Euros instead of the Dollar

Such a move from Europe would be to act in defiance of Washington

by 

FRANK SELLERS

May 25, 2018, 05:13

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Russian Finance Minister and First Deputy Prime Minister, Anton Siluanov, has proposed using the European common currency in order to settle transactions between Russia and EU members, while speaking at the St Petersburg International Economic Forum (SPIEF).

As an example of the successful function of using national currencies in foreign trade, Siluanov pointed out that Russia is already doing this with it trading partners.

RT reports:

Settlements in US currency could be dropped by Russia in favor of the euro if the EU takes a stand against the latest US sanctions on Moscow, Finance Minister Anton Siluanov said at the St. Petersburg International Economic Forum.  

“As we see, restrictions imposed by the American partners are of an extraterritorial nature. The possibility of switching from the US dollar to the euro in settlements depends on Europe’s stance toward Washington’s position,” said Siluanov, who is also Russia’s first deputy prime minister.

The EU initially supported Washington’s sanctions against Moscow, but has recently criticized US President Donald Trump’s policy of imposing trade restrictions on other countries. The EU was also hit by the introduction of US import duties on steel and aluminum. The situation escalated even more after the US withdrew from the nuclear deal with Iran.

“If our European partners declare their position unequivocally, we could definitely see a way to use the European common currency for financial settlements, such as payments for goods and services, which today are often subject to restrictions,”Siluanov said at the St. Petersburg International Economic Forum.

Siluanov added that Russia is already developing settlements in national currencies with its trading partners.

China wants to drop the dollar and use national currency in trade with Russia

Why trade in the currency of a nation which considers you as a ‘threat’?

by FRANK SELLERSApril 26, 2018, 00:51

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China and Russia need to improve relations in the economic sphere and use national currencies in bilateral trade.

The use of Western country’s currencies rather than domestic ones is viewed as entirely unnecessary, and not particularly of benefit to the national currency’s value and economy.

Additionally, conducting trade in the currency of nations which view your economic and political activity as a ‘threat’ to their interests isn’t conducive of a strong national strategy.

The chairman of the Union of Chinese Entrepreneurs in Russia, Zhou Liqun, insisted that the two countries avoid using Western currencies while adopting the practice of trading with each other in their own currencies. RT reports:

There is no need for Russian and Chinese businesses to pay each other in dollars and euros, when they can settle in rubles and yuan, according to Zhou Liqun, chairman of the Union of Chinese Entrepreneurs in Russia.

“The leaders of the two countries should think over improving relations, especially in financial cooperation. Why make payments with foreign currency? Why dollar? Why euro? They can be made directly in the yuan and the ruble,” he told RIA Novosti on the sidelines of the Valdai Discussion Club conference in Shanghai, titled “Russia and China: Contemporary Development Challenges.”