De-Dollarization Accelerates - China/Russia Complete Currency Swap
by Tyler Durden on 08/09/2014 14:21 -0400
The last 3 months have seen Russia's "de-dollarization" plans accelerate.
First Gazprom clients shift to Euros and Renminbi, then the UK signs
currency swap agreements with China, then NATO ally Turkey cuts ties and
mulls de-dollarization, Switzerland jumps in the currency swap agreements,
and BRICS create their own non-US-based funding vehicle, and then finally
this week, Russia's oligarchs have shifted cash holdings to Hong Kong. But
this week, as RT reports, 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€ś"The agreement will stimulate further development of direct
trade in yuan and rubles on the domestic foreign exchange markets of Russia
and China," the Russian regulator said.
As RT reports,
In early July, the Central Bankâ€™s chairwoman Elvira Nabiullina said
Moscow and Beijing were close to reaching an agreement on conducting swap
operations in national currencies to boost trade. The deal was later
discussed during her trip to China.
President Vladimir Putin, during his visit to Shanghai in May, said
cooperation between Russian and Chinese banks was growing, and the two
sides were set to continue developing the financial infrastructure.
â€śWork is underway to increase the amount of mutual payments in national
currencies, and we intend to consider new financial instruments,â€ť Putin
said after talks with President Xi Jinping.
It appears the deal is done...
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
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.
* * *
And as we have explained repeatedly in the past, the further the west
antagonizes Russia, and the more economic sanctions it lobs at it, the more
Russia will be forced away from a USD-denominated trading system and into
one which faces China and India.
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