This is just another in a long series of announcements about nations bypassing the use of the US dollar. This time it is China and the UK to bypass the dollar.
Here are a few key paragraphs:
"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.
The move comes as London is aiming to become a yuan offshore centre.
From Thursday, as the two currencies can be directly traded, the yuan-sterling rate will be set by the average prices offered by market makers before the opening of the interbank foreign exchange market.
Previously, businesses that needed to convert money from yuan to sterling or vice versa had to use the US dollar as an intermediary currency.
Earlier this year, China allowed direct domestic trading of the yuan against the New Zealand dollar, as part of moves to internationalise its currency.
Other countries with direct yuan trading facilities are Australia, Japan and the US."
Russia is now openly calling for a war on the US dollar. China has been in that process for awhile now as noted in the article above. It will be interesting to see how the EU countries respond to this call. Here we have even the UK bypassing the US dollar.
We have to keep an eye on Saudi Arabia as they could announce they will trade oil in any currency which would be a huge blow to the US dollar (petrodollar) as global reserve currency. The world is a chess board right now with moves being made all over the globe and alliances changing from what they have been in the past.
At some point the demand abroad for US dollars is going to drop quite a bit as all these new trade arrangements come into existence. When the supply of anything exceeds the demand for it, the value drops. We can expect this to happen at any time for the US dollar in the coming months and years.
This should lead to the anticipated "global currency reset" where the dollar and all currencies are adjusted to reflect the changes in value. Either in the market as they float against each other or by an actual direct edict (if a crisis unfolds in the currency markets). The timing is unpredictable but the trend is clear.
Jim Rickards believes at some point the IMF will step in and propose that the SDR become the new global reserve currency. We will cover that some more in an upcoming post (later this summer) and offer some food for thought on how that might work.
Others believe the world is breaking down into regional areas of influence with no one central authority. That is certainly how things are looking right now.
Time will tell. Things can change quickly as we have seen.