De-Dollarization: China’s Gold Could Break Global Dependence On U.S. Dollar; Russia, India Closer To Switching To Local Currencies; Ruble-Yuan Settlements Shaping Up To Set A New Chapter

De-Dollarization: China’s Gold Will Break Global Dependence On U.S. Dollar, Economist Says

China can ultimately overthrow the global domination of the U.S. dollar by using its 30,000 tons of gold reserves, according to Chinese economist Jin Zihou.

Citing former U.S. Federal Reserve Chair Alan Greenspan, Chinese economic observer Jin Zihou suggested that the Chinese renminbi would be able to deal a lethal blow to today’s financial system should Beijing convert its massive hoard of $4 trillion in foreign exchange reserves into gold.

Jin emphasized that as the U.S. dollar’s power is gradually fading, China, the largest U.S. creditor, may potentially destroy the U.S. dollar.

Still the U.S. dollar remains as the “biggest player,” accounting for 60 percent of global reserves. However, many countries are looking at ways to limit the power of the U.S. dollar, to de-dollarize, in order to become less dependent on it.

The only way for Beijing to end the U.S. dollar’s reign, according to Jin, is to accumulate a significant amount of gold, namely 30,000 tons. In this case, China would be able to challenge the U.S.’s longstanding dominant position in the realm of global trade and financial markets.

Alasdair Macleod, a researcher and former Executive Director at an offshore bank in Guernsey and Jersey, highlighted that between 1983 and 2003 China could have secretly accumulated almost 20,000 tons of gold.

More De-Dollarization On The Horizon As Russia, India Closer To Switching To Local Currencies

The Central Bank of Russia and The Central Bank of India are moving closer to an agreement to use their national currencies for trade settlements, according to a statement released by Russia’s Central Bank on Friday.

The National Banks of Russia and India said they did not see any regulatory restrictions in making settlements in rubles and rupees on trade contractsand that both banks will soon hold discussions with the business communities of the two countries, according to the report.

Ksenia Yudaeva, the First Deputy Chairwoman of the Bank of Russia and Harun Khan, Deputy Governor of the Reserve Bank of India chaired a regular meeting of the Subcommittee on Bilateral Financial and Banking Issues – a profile body within the Russian-Indian Intergovernmental Commission.

Representatives of Russian and Indian commercial banks, in addition to Russian trade representation in India attended the meeting. The parties discussed current issues in Russian-Indian cooperation in the banking sector, including issues of cooperation between Russian and Indian credit institutions.

The sub-committee considered the conclusions and recommendations prepared by an expert working group for settlements in national currencies. The working group noted in its report to the sub-committee that there were no serious regulatory limitations for making settlements on trade contracts in rubles and rupees and offered standard settlement models which correspond on the whole to the current commercial practice of banks of the two countries. A decision was made to discuss with business community of both countries a possibility of a wider practical use of these models, as well as measures to reduce transaction costs when making settlements in national currencies.”

As a multi-national currency deal between Russia and India grows closer to fruition, the question is now when, versus if.

Earlier this week, Russia proposed to Indonesia and Vietnam to use their national currencies for trade settlements.

De-Dollarization: Ruble-Yuan Settlements Shaping Up To Set A New Chapter

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.