China and UK establish direct currency trades
China and the UK have started the direct trading of the yuan against the pound, in a move that will help reduce currency conversion costs. Both sides are hopeful the direct yuan-sterling trade will help facilitate two-way investment and trade between China and Britain. Earlier this week, the Bank of England appointed the China Construction Bank as a yuan clearing house in London. A clearing house essentially acts as the middleman between two different parties, and is also the agent through which financial instruments such as shares, bonds and currencies are often traded. Previously, businesses that needed to convert money from yuan to sterling or vice versa had to use the US dollar as an intermediary currency. • source: bbc.com
What does London’s China currency deal actually mean?
“This announcement is symbolic of their new intentions. China’s government is making it clear that it’s open for business,” says Mr Derrick. Enabling direct foreign-exchange market deals between the renminbi and the British pound should increase bilateral trade. Beng-Hong Lee, head of markets, China for Deutsche Bank, says being able to directly trade sterling and renminbi will improve transparency, and “help lay the foundation for the use of the renminbi as a new global currency”. And having a global currency will make it easier for China to both export and import, with more countries willing to accept renminbi-denominated deals. Mr Derrick suggests a further underlying reason is to remove the exchange risk with the US dollar, saying China could be concerned that the Federal Reserve’s printing of money to stimulate growth could devalue the dollar. • source: bbc.com
China and Japan to start direct yen-yuan trade in June
China will allow direct trading of the yuan and the Japanese yen, in a move aimed at promoting trade between Asia’s two biggest economies.
This means the two countries will not be using the US dollar as an intermediary. “This is part of China’s broader strategy to reduce dependence on the dollar.” • source: bbc.com
China and Australia in currency pact
Beijing is trying to promote the yuan as an alternative to the US dollar’s role as a global reserve currency. • source: bbc.com
Russia Holds “De-Dollarization Meeting”: China, Iran Willing To Drop USD From Bilateral Trade
That Russia has been pushing for trade arrangements that minimize the participation (and influence) of the US dollar ever since the onset of the Ukraine crisis (and before) is no secret. Voice of Russia reports citing Russian press sources that the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is “ready to handle the increased number of ruble-denominated transactions”. • source: zerohedge.com
Putin Advisor Proposes “Anti-Dollar Alliance” To Halt US Aggression Abroad
Putin advisor Sergey Glazyev, the same person who in early March was the first to suggest Russia dump US bonds and abandon the dollar in retaliation to US sanctions, a strategy which worked because even as the Kremlin has retained control over Crimea, western sanctions have magically halted. Glazyev was also the person instrumental in pushing the Kremlin to approach China and force the nat gas deal with Beijing. It is this same Glazyev who published an article in Russian Argumenty Nedeli, in which he outlined a plan for “undermining the economic strength of the US” in order to force Washington to stop the civil war in Ukraine. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system. Putin’s economic aide and the mastermind behind the Eurasian Economic Union, argues that Washington is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow’s portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won’t be able to service their debts to European banks. Co-opting European countries in a new arms race and military operations against Russia will increase American political influence in Europe and will help the US force the European Union to accept the American version of the Transatlantic Trade and Investment Partnership, a trade agreement that will basically transform the EU into a big economic colony of the US. Glazyev believes that igniting a new war in Europe will only bring benefits for America and only problems for the European Union. Washington has repeatedly used global and regional wars for the benefit of the American economy and now the White House is trying to use the civil war in Ukraine as a pretext to repeat the old trick. Glazyev’s set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed’s printing press. Putin’s advisor proposes the creation of a “broad anti-dollar alliance” of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US’ aggression. Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America’s attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin’s aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe’s independence from the US and a war against the dollar. • source: zerohedge.com
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