China and Russia Developing Yuan-Ruble Trade Settlement

You’ve heard the rumor that Middle Eastern oil producers, plus China, Japan and France have all agreed to start trading oil using a basket of currencies – instead of the dollar – starting in 9 years (see this explanation for why the governments are denying the rumor).

But – whether or not the rumor is true – the world has actually been moving away from the dollar as the preferred method for settling trades for years.

The Wall Street Journal reported yesterday:

China and Russia are working on ways to eventually settle their trade with the Chinese yuan and Russian ruble, senior government officials from the two countries said Tuesday.

In January, it was reported that China had reached a similar arrangement with Brazil:

The Brazilian Central Bank announced it had reached an initial understanding with China for the gradual elimination of the US dollar in bilateral trade operations which in 2009 are estimated to reach 40 billion US dollars.

Indeed, as I pointed out in March 2007, many countries started moving out of the dollars as the basis for international trade settlements, including:

  • Venezuela and 12 other Latin American countries as well as Cuba
  • Many other countries

As I and many others have argued for years, everyone wants to get out of the dollar, but not all at once. Foreign central banks want to move out of dollars gradually so they are not left holding worthless paper.

But the process actually started a while back.

This entry was posted in General. Bookmark the permalink.
  • http://www.blogger.com/profile/16229628652152584292 RealityZone

    EXACTLY; this has to be done step-by-step. in order not to cause a panic. or for their own investments in the $$$ not to tank. i have been saying for a long time, that we are moving into a regional globalization. imo; right now the ones to watch as always are the imf–sdr– and china. as you say china is and has been making deals all over the planet, while we are playing globocop along side nato. this can not be sustainable. a very rude awakening is coming.

  • http://Anonymousnoreply@blogger.com Anonymous

    We're hosed. Damn Odumba.

  • http://www.willaimsinference.com John Trudgian

    I view this largely as political posturing. The vast majority of international trade occurs between and within large companies. The invoicing currency is thus a voluntary commercial decision. There is no coercive reason to use the US dollar apart from the *fact* of it's convenience: the deepest, most sophisticated and reliable payment and transaction infrastructure on the planet. Good luck to the Chinese, Brazilians, Arabs and the rest. Unless they can duplicate the full functionality of the US system, they will simply disadvantage their own companies in commercial negotiations.

 

 

Twitter