China and Russia complete next major deal to end dollar domination
A few months ago, Russia and China completed a historical energy agreement worth nearly $400 billion that would allow for remittance in either Yuan or the Ruble, and create the first direct blow against petro-dollar hegemony in the 40 years that it has reigned as the global reserve currency.
And in light of America’s continued efforts to isolate Russia, and attempt to destroy their economy through petty sanctions, Russia and China have just achieved the second step in killing the dollar through the signing of a new agreement that facilitates a direct currency swap between the Ruble and the Yuan, and will create a new avenue in the East through which other BRICS nations, and their associated partners, can trade freely outside the reserve currency.
The Russian and Chinese central banks have agreed a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments.
â€śThe draft document between the Central Bank of Russia and the Peopleâ€™s Bank of China on national currency swaps has been agreed by the parties,â€ť and is at the stage of formal approval procedures, ITAR-TASS quotes the Russian regulatorâ€™s office on Thursday.
The Russian Central Bank is not giving precise details on the size of the currency swaps, nor when it will be launched. It says this will depend on demand.
According to the bank, the agreement will serve as an additional instrument for ensuring international financial stability. Also, it will offer the possibility to obtain liquidity in critical situations.
â€śThe agreement will stimulate further development of direct trade in yuan and rubles on the domestic foreign exchange markets of Russia and China,â€ť the Russian regulator said.
Currently, over 75 percent of payments in Russia-China trade settlements are made in US dollars, according to Rossiyskaya Gazeta newspaper. – Russia Today (RT)
This new swap line also sets up the eventual foundation for a new trade currency that will be backed with gold as each country now holds two of the largest metal reserves in the world. Â Couple this with another BRICS nation (India) that is third on the list for gold reserves and the East is setting up step by step the means and facilities to end the dollar as the global reserve currency.
It is perhaps most ironic that the nation that is using the dollar as a weapon to impose sanctions on the Russian Federation is also helping to escalate its eventual demise. Â The more the U.S. continues to use the reserve currency not as a global trade settlement currency, but instead as a way to further American military and political policy, the sooner nations like India, who for the first time in twenty years facilitated the rejection of a WTO trade agreement, will join in with Russia and China and fully back the call to end the dollar outright as the global reserve currency, and help usher in a new de-Americanized financial system.
Kenneth Schortgen JrÂ isÂ a writer forÂ Secretsofthefed.com,Â Examiner.com, and hostsÂ the popularÂ web blog,Â The Daily Economist.Â Ken can alsoÂ be heard Friday evenings giving an weekly economic report on theÂ Angel Clark radio show.