A Shift Of Power: Russia and China Finalize Moves To Replace U.S. Dollar As World Reserve Currency...Russia and China recently agreed to establish a joint investment forum together to further their de-dollarization efforts. The new fund will be called the Russia-China RMB Cooperation Fund.Russian President Vladimir Putin held talks with Chinese President Xi Jinping on July 4th during the meeting the two leaders discussed furthering bilateral ties.
“We have expressed our support for the agreement between the Russian Direct Investment Fund (RDIF) and the China Development Bank towards the creation of a joint investments fund worth 65 billion yuan $9.56 billion. We agreed to continue consultations on a more wide use of national currencies in mutual payments and investments. I am sure that the opening of the first foreign office of the Central Bank of Russia in China will contribute to that,” Putin said.
Meanwhile, last month China and Russia held their 7th Financial Ministerial Dialogue in Shanghai striking a $11 billion dollar funding deal.
Additionally, while at the meeting, Russia's development bank VEB signed an agreement to attract 6 billion yuan or ($882.35 million) from China's Development Bank for innovations, including development of blockchain technologies. So it's a safe bet to invest in crypt0-currencies as China and Russia are backing blockchain technology.
Coincidentally enough the meeting took place where the infamous Shanghai accord was finalized in February 2016.
So what was the Shanghai accord and why haven't you heard about it?
It was essentially a meeting between central bankers who voted to begin pulling the plug on the U.S dollar by weakening it for imported inflation as well as weakening the Yuan according to former CIA financial analyst Jim Rickards.
"This consensus on a weaker yuan and dollar was the genesis of what became known as the “Shanghai Accord.” This was an agreement reached on the sidelines of the G-20 central bankers and finance ministers meeting in Shanghai on Feb. 26," Rickards wrote.
In other words it was a way to equal out the two currencies that are pegged together in value.
The Chinese and Russian economic moves don't stop there. Earlier this year in May, Chinese President Xi Jinping called for closer cooperation across Asia and Europe to support measures of anti-terrorism to finance, as leaders from 29 countries gathered to promote the Silk Road initiative a Chinese trade deal that would increase Beijing's global influence on trade and geopolitics Radio Free Europe reported.
This would solidify China as a new stronger global power ready to take on the role of being a dominant world reserve currency.
In March, Russia’s central bank opened its first overseas office in Beijing, coming one step closer to replacing the U.S. dollar as the world’s reserve currency.
The South China Morning Post reported the new office was part of agreements made between the two countries “to seek stronger economic ties.”
“The opening of a Beijing representative office by the Central Bank of Russia was a “very timely” move to aid specific cooperation, including bond issuance, anti-money laundering and anti-terrorism measures between China and Russia,” Dmitry Skobelkin, deputy governor of the Central Bank of Russia said .
Financial regulators from both countries agreed last May to issue home-currency-denominated bonds in each other’s respective markets, a move that is seen as the beginning of the dethroning of the U.S. dollar, as both countries have stated they would implement a replacement for years.
China opened up its gold market in 2016, an entirely separate system than the COMEX gold futures market in New York and the Over-the-Counter (OTC) trades cleared through the London Bullion Market. China and Russia have both been working to undermine the West and the U.S. dollar since China called for a new world reserve currency in 2009.
A Wikileaks cable titled “China increases its gold reserves in order to kill two birds with one stone” shows that China was already shifting some of its massive foreign holdings into gold and away from the U.S. dollar in 2009.
China again began stockpiling gold in 2013, when they bought JPMorgan’s building that previously housed its gold.The IMF and United Nations have even expressed agreement that it’s time to replace the U.S. dollar as the world reserve currency with what’s known as SDRs or special drawing rights . Then the Asian Infrastructure Investment Bank (AIIB) was planned between 2010-2012, and was fully operational by 2016.
“China has been pushing for the SDR to become more widely used for some time, as a way to challenge the dominance of the dollar without pushing the renminbi as a direct competitor,” Julian Evans-Pritchard, a China economist at Capital Economics in Singapore, told Reuters.
In 2014, Russian and Chinese central banks agreed on a draft currency swap agreement, which allowed them to increase trade in domestic currencies and cut the dependence on the U.S. dollar in bilateral payments made between the two countries.
That same year, China’s Foreign Exchange Trade System extended the yuan’s swaps trading to 11 currencies on the interbank foreign-exchange market, Bloomberg reported. Russia and China furthered the dollar’s divide in 2015, by setting up an alternative to the EU-based global currency messaging and interchange service or SWIFT called CIPS or (China International Payment System.)
China then approved the usage of the Russian Ruble over the U.S. dollar for its border city Suifenhe City, Heilongjiang Province in a pilot program . Later the same year, the two countries opened up an e-commerce platform called incubator in that same province.
Following years of work, on October 1st, 2016, the Yuan joined the IMF’s SDR currency basket.
The IMF did an analysis and concluded that financial instruments denominated in SDR would lower volatility and risk compared to holding assets in individual currencies, as well as save costs. “M-SDRs could, therefore, be attractive to investors and issuers by offering a prepackaged diversification option,” the IMF wrote .
For years now, Russia and China have buying gold in massive amounts and dumping U.S. Treasury bonds at an accelerating rate. Finally there is the BRICS alliance formed of Brazil, Russia, India, China and South Africa – to bypass and overtake the U.S. dollar as the world’s reserve currency. POWERS ARE SHIFTING As Russia Sells Chinese Yuan Bonds! - The FALL Of The DollarI talk with author and economic analyst John Sneisen about the alarming new development between Russia and China as Russia sells Chinese Yuan bonds for the first time.
As countless countries around the world swap out of the US world reserve currency, China has attempted to take the stage as the new world reserve currency. China has of course been leading the cause for a centrally planned cashless society which the IMF wants to implement into the SDR Special Drawing Rights world currency out of desperation as the US dollar as well as countless other fiat currencies around the world reach the brink of collapse.
They are attempting to raise interest rates enough to drop them out but it doesn't look like it'll be possible without going into negative territory, so a centrally planned cashless society is their best option as it stops any run on any bank and teamed with bail-ins they can't really use. It's the ultimate globalist end game.
If your money's in the bank, it's not yours, it's the bank's. If your money's ALWAYS going through the bank via digital transactions, legal tender laws and entirely centralized, then it's NEVER your money, it's ALWAYS the bank's and you're essentially in servitude to the government and banking system.
This is precisely why people have to be aware of this situation and prepare themselves. This will be epic in its destruction of the monetary world.
With bail-in regimes pushed forward, banks can simply take your deposits and spend it on their ridiculous debts. And as unions like the EU and people like Mario Draghi push to stop insurance on bank deposits so that in the case of a bail-in your money won't be insured at all, keeping money in a bank becomes incredibly risky.
Then with Treasury Secretary Mnuchin talking about cutting China off the US dollar which he's already sanctioned the Bank of Dandong on all while the IMF's Christine Lagarde talks about moving their headquarters to Beijing China, this has gotten more obvious than ever. A perfect storm for China.Russia And China Declare All Out War On US Petrodollar — Prepare For Exclusive Trade In Gold..The formation of a BRICS gold marketplace, which could bypass the U.S. Petrodollar in bilateral trade, continues to take shape as Russia’s largest bank, state-owned Sberbank, announced this week that its Swiss subsidiary had begun trading in gold on the Shanghai Gold Exchange.
Russian officials have repeatedly signaled that they plan to conduct transactions with China using gold as a means of marginalizing the power of the dollar in bilateral trade between the geopolitically powerful nations. This latest movement is quite simply the manifestation of a larger geopolitical game afoot between great powers.
According to a report published by Reuters:
Sberbank was granted international membership of the Shanghai exchange in September last year and in July completed a pilot transaction with 200 kg of gold kilobars sold to local financial institutions, the bank said.
Sberbank plans to expand its presence on the Chinese precious metals market and anticipates total delivery of 5-6 tonnes of gold to China in the remaining months of 2017.
Gold bars will be delivered directly to the official importers in China as well as through the exchange, Sberbank said.
Russia’s second-largest bank VTB is also a member of the Shanghai Gold Exchange.
To be clear, there is a revolutionary transformation of the entire global monetary system currently underway, being driven by an almost perfect storm. The implications of this transformation are extremely profound for U.S. policy in the Middle East, which for nearly the past half century has been underpinned by its strategic relationship with Saudi Arabia.
THE RISE & FALL OF THE PETRODOLLAR
The dollar was established as the global reserve currency in 1944 with the Bretton Woods agreement, commonly referred to as the gold standard. The U.S. leveraged itself into this power position by holding the largest reserve of gold in the world. The dollar was pegged at $35 an ounce — and freely exchangeable into gold.
By the 1960s, a surplus of U.S. dollars caused by foreign aid, military spending, and foreign investment threatened this system, as the U.S. did not have enough gold to cover the volume of dollars in worldwide circulation at the rate of $35 per ounce; as a result, the dollar was overvalued.
America temporarily embraced a new paradigm in 1971, as the dollar became a pure fiat currency (decoupled from any physical store of value), until the petrodollar agreement was concluded by President Nixon in 1973.
The quid pro quo was that Saudi Arabia would denominate all oil trades in U.S. dollars, and in return, the U.S. would agree to sell Saudi Arabia military hardware and guarantee the defense of the Kingdom.
A report by the Centre for Research on Globalization clarifies the implications of these most recent moves by the Russians and the Chinese in an ongoing drive to replace the US petrodollar as the global reserve currency:
Fast forward to March 2017; the Russian Central Bank opened its first overseas office in Beijing as an early step in phasing in a gold-backed standard of trade. This would be done by finalizing the issuance of the first federal loan bonds denominated in Chinese yuan and to allow gold imports from Russia.
The Chinese government wishes to internationalize the yuan, and conduct trade in yuan as it has been doing, and is beginning to increase trade with Russia. They’ve been taking these steps with bilateral trading, native trading systems and so on. However, when Russia and China agreed on their bilateral US$400 billion pipeline deal, China wished to, and did, pay for the pipeline with yuan treasury bonds, and then later for Russian oil in yuan.
This evasion of, and unprecedented breakaway from, the reign of the US dollar monetary system is taking many forms, but one of the most threatening is the Russians trading Chinese yuan for gold. The Russians are already taking Chinese yuan, made from the sales of their oil to China, back to the Shanghai Gold Exchange to then buy gold with yuan-denominated gold futures contracts – basically a barter system or trade.
The Chinese are hoping that by starting to assimilate the yuan futures contract for oil, facilitating the payment of oil in yuan, the hedging of which will be done in Shanghai, it will allow the yuan to be perceived as a primary currency for trading oil. The world’s top importer (China) and exporter (Russia) are taking steps to convert payments into gold. This is known. So, who would be the greatest asset to lure into trading oil for yuan? The Saudis, of course.
All the Chinese need is for the Saudis to sell China oil in exchange for yuan. If the House of Saud decides to pursue that exchange, the Gulf petro-monarchies will follow suit, and then Nigeria, and so on. This will fundamentally threaten the petrodollar.
According to a report by the Russian government media, significant progress has been made in promoting bilateral trade in yuan, between the two nations, as the first step towards an even more ambitious plan—using gold to make transactions:
One measure under consideration is the joint organization of trade in gold. In recent years, China and Russia have been the world’s most active buyers of the precious metal.
On a visit to China last year, deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.
In April, Sberbank expressed interest in financing the direct import of gold to India—also a BRICS member. Make no mistake that a BRICS gold marketplace could be used to bypass the dollar in bilateral trade, and undermine the hegemonic control enjoyed by the US petrodollar as the global reserve currency.
“In 2014 Russia and China signed two mammoth 30-year contracts for Russian gas to China. The contracts specified that the exchange would be done in Renminbi [yuan] and Russian rubles, not in dollars. That was the beginning of an accelerating process of de-dollarization that is underway today,” according to strategic risk consultant F. William Engdahl.
Russia and China are now creating a new paradigm for the world economy and paving the way for a global de-dollarization.
“A Russian-Chinese alternative to the dollar in the form of a gold-backed ruble and gold-backed Renminbi or yuan, could start a snowball exit from the US dollar, and with it, a severe decline in America’s ability to use the reserve dollar role to finance her wars with other peoples’ money,” Engdahl concludes.