The Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade.
According to the South China Morning Post the new office was part of agreements made between the two neighbours “to seek stronger economic ties” since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.
According to Dmitry Skobelkin, the deputy governor of the Central Bank of Russia, the opening of a Beijing representative office by the Central Bank of Russia was a “very timely” move to aid specific cooperation, including bond issuance, anti-money laundering and anti-terrorism measures between China and Russia.
The new central bank office was opened at a time when Russia is preparing to issue its first federal loan bonds denominated in Chinese yuan. Officials from China’s central bank and financial regulatory commissions attended the ceremony at the Russian embassy in Beijing, which was set up in October 1959 in the heyday of Sino-Soviet relations. Financial regulators from the two countries agreed last May to issue home currency-denominated bonds in each other’s markets, a move that was widely viewed as intended to eventually test the global reserve status of the US dollar.
Speaking on future ties with Russia, Chinese Premier Li Keqiang said in mid-March that Sino-Russian trade ties were affected by falling oil prices, but he added that he saw great potential in cooperation. Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon.
If Russia – the world’s fourth largest gold producer after China, Japan and the US – is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.
* * *
Meanwhile, as the Russian central bank was getting closer to China, China was responding in kind with the establishment of a clearing bank in Moscow for handling transactions in Chinese yuan. The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday this past Wednesday.
“The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation,” Dmitry Skobelkin, the abovementioned deputy head of the Russian Central Bank, said.
“The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries,” he added according to.
Irina Rogova, a Russian financial analyst told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.
* * *
Bypassing the US dollar appears to be paying off: according to the Chinese State Administration of Taxation, trade turnover between China and Russia increased by 34% in January, in annual terms. Bilateral trade in January 2017 amounted to $6.55 billion. China’s exports to Russia grew 29.5% reaching $3.41 billion, while imports from Russia increased by 39.3%, to $3.14 billion. Just as many suspected, with Russian sanctions forcing Moscow to find other trading partners, chief among which China, this is precisely what has happened.
The creation of the clearing center enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly.
In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates. The clearing center is one of a range of measures the People’s Bank of China and the Russian Central Bank have been looking at to deepen their co-operation, Sputnik reported.
One of the most significant measures under consideration is the previously reported push for joint organization of trade in gold. In recent years, China and Russia have been the world’s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.
“We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia’s TASS news agency.
In other words, China and Russia are shifting away from dollar-based trade, to commerce which will eventually be backstopped by gold, or what is gradually emerging as an Eastern gold standard, one shared between Russia and China, and which may day backstop their respective currencies.
Meanwhile, the price of gold continues to reflect none of these potentially tectonic strategic shifts, just as China – which has been the biggest accumulator of gold in recent years – likes it.
twocats on Sat, 1st Apr 2017 8:55 pm
death of the petrodollar has been building for a while. capturing iraq and “controlling” that oil flow, grexit and the overall weakness of the euro, all have helped sustain the petrodollar for the last 15 years or so. But with the rise of DJT I imagine some of the strength will erode, making space for alternatives.
Midnight Oil on Sat, 1st Apr 2017 9:53 pm
When do we invade? Didn’t nobody learn anything when Saddam Hussein bypassed the God Almighty Dollar!?
Now I know why Trump is beefing up the War Budget. Go get them Tiger!
makati1 on Sat, 1st Apr 2017 11:03 pm
MO, Trump is a paper tiger. But the insane people who really run the country might make the fatal mistake and believe that they could actually win a war with China/Russia. We shall see.
energy investor on Sat, 1st Apr 2017 11:34 pm
What?
Japan now a major gold producer and Australia and South Africa don’t even register?
What else is wrong with this article?
makati1 on Sun, 2nd Apr 2017 1:15 am
Smoking something good, I think, Energy.
2015 Gold producing countries in tons:
China – 450
Aust. – 278
Russia – 242
USA – 214
Canada – 153
Peru – 145
S.Africa – 145
Mexico – 135
etc.
https://www.statista.com/statistics/264628/world-mine-production-of-gold/
” Global production of gold reached approximately 3,000 metric tons in 2015″
BTW: According to Forbes: “The Philippines holds the world’s second largest gold reserves…”
https://www.forbes.com/sites/ralphjennings/2015/04/05/trillion-dollar-goldmine-for-philippine-economy-emerging-from-murky-pit/#139a6bc225cf
Interesting world isn’t it?
Boat on Sun, 2nd Apr 2017 1:30 am
mak,
Iraq is using those oil dollars to fight radical Sunnies with a little help from the west. In Syria the west arms those who will fight Sunnies and Shities. Call yourself an enemy of the west like Assad and Isis etc you will find yourself in deep shyt. The west bombs for the government oh Lybia. Once their more stable and oil flows they will have the cash to fight anti west fighters. Get the trend? Who is next. Iran? Nigeria? Ps, taking over oil fields attracks bombs and new management. Just an observation.
Anonymouse on Sun, 2nd Apr 2017 2:24 am
No boatytard, its not an, ‘observation’, its just another one of your brain-farts. Your entire post is as incomprehensible as usual. Maybe it sounded coherent in your head, somehow?
makati1 on Sun, 2nd Apr 2017 4:13 am
Anon, Boat rambles … and may be on drugs. I followed the comment then got lost down his rabbit hole. LOL
Davy on Sun, 2nd Apr 2017 5:17 am
“Bilateral trade in January 2017 amounted to $6.55 billion.”
This is still an ass pimple in volume for globalism. It is wise that these countries are trading together like this. This is the same thing Canada and the US are doing at $575BIL. WTF, why is $6.55 considered special. Because anti-Americanism is a limp dick. We are in the 21st century now it makes sense to bypass a middle man and increase yield. China and Russia are exceptionally good at trading and making deals. Its good business sense for these two neighbors. Making this into a dollar war issue shows an agenda of impotence.
The dollar is too be to fail and cannot be decoupled from. Gold and a currency basket are not the answer. They should be the answer. The reason they are not is we are unable to arrange it. Just like we should be many things we can no longer do as a global people. Globalism has run its course and we are not going to manage away its collapse by leaving the dollar. No other currency or basket of currencies are going to work until a collapse of this arrangement and unfortunately that is going to be ugly. Currencies will be way done the list of concerns when globalism fails.
The dollar problem is a front and center in the collapse process of globalism because it is the primary tool of global debt. Global debt is a primary issue of global collapse. The dollar is beyond the reach of even the US at this point with many other nations issuing dollar debt that the US has no control over. In fact this loss of US control over its currency is increasing the systematic risk of the US. The potential for an uncontrolled flooding of dollars back into the US is a real danger.
Russia and China need to be doing these deals but look at the dollar numbers and look at the potential. It is not anything to crow about. More of the bric bank stuff. We are stuck with the dollar. At some point something else will takes it place maybe but not without a nasty process.
BobInget on Sun, 2nd Apr 2017 1:20 pm
Makati hit the nail directly.
The solution, as there’s not enough gold in the world for a month of oil trading, digitalize it. To do that we need to establish the value of (pure) gold. Since there’s more USD’s floating around being used a base currency by a dozen countries and as it happens gaining in value since the Whitehouse whitewash.
I’m not saying current state will last forever.
The British pound was for a long time the currency by which everything was valued. It’s still highly valued and will remain so for at least three years.
Clearly, now that North America is exporting oil and gas, technology and culture, it will be decades before we all need to learn Chinese.
When guilty or innocent oil producers get digital dollars they promptly pay workers, buy materials and equipment, service debt, petro dollars are returned to circulation in seconds.
makati1 on Sun, 2nd Apr 2017 6:34 pm
BobInget, but, but, the U$ is NOT a net exporter of oil and gas. It is a net IMPORTER of both. About like saying, I’ll buy a dozen eggs from you and then sell back one of them.
And your idea that the U$D is sound is another fiction kept alive by a ton of fake statistics and outright lies by the U$ government and Wall Street. It may not crash and burn today, but the fire is burning on the fuse and the realization by the world that U$Ds are worthless is dawning on the rest of the world. It is only a matter of time before that ‘trust’ is gone. With it, the value of the U$D as the world trade currency will vanish along with the 1st world lifestyle of America. I hold foreign cash, not dollars.
As for learning Chinese, don’t worry, they will not be interested in what is left of the U$ after the SHTF. You won’t have anything they want.
Davy on Sun, 2nd Apr 2017 7:58 pm
makatiland
“OVERPOPULATION IN MANILA”
http://tinyurl.com/zysetna
“The Philippine capital is one of the most overpopulated places on earth. There are few other areas where so many people live so closely together: On average there are 41,282 people per square kilometre, but in some slum regions there are as many as 88,000 people living per square kilometre. The worlds overpopulation is a growing and complex problem. But for the residents of Manila the result is quite simple. They are running out of space. Families live in home-made shacks built in cemeteries, or between railroad tracks or under bridges. They live wherever they can find some space. Even the city’s toxic garbage dumps are home to people who eat, sleep and live surrounded by rotting trash. With so many residents, the city’s resources are strained to the limit. Large parts of Manila’s 11 million residents lack clean drinking water, work, and access to healthcare and education.”
Boat on Sun, 2nd Apr 2017 8:31 pm
mak,
Show me the lies. The Eia clearly shows the US is an importer of both nat gas and oil. Hell they put out several charts on the subject every month. Go to the web site and read sometimes.
makati1 on Sun, 2nd Apr 2017 9:39 pm
Davy, is NYC underpopulated? You like to cherry-pick stats that are meaningless. Most of the Philippines is uninhabited because there are no roads making it easy to spread/develop. It WILL spread when the SHTF because it has to. But the survival skills and farming experience is still there, unlike today’s America.
As for toxic: Do you know what is in YOUR drinking water? Have you had a thorough test made of its contents? I bet not. You may be unpleasantly surprised. You think you live in the 1st world …
BTW: Some of those ‘millions’ who live in Manila are there on work visas from other countries or are foreign students going to one of the many colleges there. Not permanent citizens. But, you would not know that sitting in the backwater of America, sucking up the Koolaid. Keep pointing that finger of hate and you will soon notice that there are three pointing back at you. I weighed the balance and made my choice. You are stuck with your situation. LMAO
makati1 on Sun, 2nd Apr 2017 9:41 pm
Boat, I am not going to bother. You seem to have short term memory problems. I have read Short and others here tell you that the U$ is a net IMPORTER of oil and NG. You seem to forget. You can google the facts for yourself. Hint: 8 million bbls/day.
Boat on Sun, 2nd Apr 2017 11:44 pm
mak,
Your full of shyt. I read the Eia reports and keep up with them. I am not pro or anti oil idiot. I just like to stay abreast of world energy as a hobby. I am not invested in ideology or have an agenda. If you can’t control it why worry about it. OTOH that does not mean I don’t have opinions.
makati1 on Mon, 3rd Apr 2017 3:08 am
Boat, anyone who relies on government ‘stats’ is a fool. Bet your life on them and you will lose. Opinions should not be presented as fact. They are your idea of the real world. not that of the rest of us. The U$ only exports some of what they import as oily products, not raw oil. The US is not, and never will be, energy independent until they hit the stone age level.
It is a waste of time to follow the ups and downs posted about oil. They are all bullshit. Better to spend your time looking at the ecology that is dying around you. Or even the economy that you rely on. The oily world is dying along with the rest of civilization but the real cause of human extinction will be the natural world, not big petroleum.
Davy on Mon, 3rd Apr 2017 5:21 am
“Most of the Philippines is uninhabited because there are no roads making it easy to spread/develop. It WILL spread when the SHTF because it has to.”
Laughing at you makati. I must have hit the mark with what really worries you. You are not going to have the uninhabited spaces developed makati. They are not developable or they would be now. What a joke to think 20MIL people will leave Manilla and go to the mountains and make a life. There is nowhere to move in the P’s and it already has local ecosystem failure. When global resupply ends your Island population will lose 50MIL people easily. Numbers don’t lie makati.
“Do you know what is in YOUR drinking water?”
My drinking water is wonderful. It is well water and has been tested. It is a little high in calcium making scale my only problem. Makati, do you even drink Manilla water. I bet you drink bottled water.
Double friggen LOL: “BTW: Some of those ‘millions’ who live in Manila are there on work visas from other countries or are foreign students going to one of the many colleges there.” Makati your metropolitan area stretches for miles and miles and is 20MIL people. A few thousand college students are not going to dent that footprint.
Anonymouse on Mon, 3rd Apr 2017 1:25 pm
Boatyyard says “I am not pro or anti oil idiot.”
ROFL.
You are both boatard. Why limit yourself to being only one kind of idiot, when you can be twice the idiot for the same amount of effort?
retard…. LoL!