Monday, May 11, 2015

Russia Today: Ruble-Yuan Settlements set to Reshape Global Finance

This article in Russia Today talks about how the cooperation between Russia and China to use their own currencies continues to progress and expand. Below a few quotes from the article and then a few added comments.

"Settlements in local currencies between Russia and China now account for 7 percent of the bilateral trade, but the potential for growth is tremendous, experts tell RT. Yuan-ruble trade in Russia has grown 700 percent in a year.
Growing cooperation between Russia and China has become one of the hottest topics in the global economy. It is signaling the emergence of a strong alliance of one the world’s richest and strongest economies, which is expected to reshape the existing western-dominated economic model.
While energy deals between the resource – rich Russia and resource – hungry China look natural, bringing the countries’ finances closer looks like a real challenge to the US dollar system, experts agree, although the transition won’t be quick."
The transition from the usual scheme of payments in major currencies is not a quick process, but with a certain political will and sufficient mechanisms of hedging currency risks in exports and imports it is quite feasible,” Aleksandr Prosviryakov, Treasuries & Commodities Manager at PWC, told RT. He added that the first step towards this was the signing of a three-year agreement on currency swap worth 150 billion yuan in October 2014.
Currency swaps allow companies in both countries to use national currencies in mutual settlements. That means the Russian importers can purchase Chinese products with yuan, and the Chinese can make payments in rubles.
My added comments:
The growing effort to bypass the use of the US dollar is something we have covered here quite extensively. This article just reminds us that everything is moving forward along those lines, but the change does not happen quickly as noted in the article. The slow nature of the change makes it hard for the average person to stay interested in it. But the change still is moving forward.

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