It is well known that the most important milestone in establishing the hegemony of the US dollar in the world was the massive transition in oil trade to this currency. Simultaneously with the liquidation of the gold-dollar standard in the 70-s of the twentieth century, the formation of the monetary standard, which is based on the petrodollar, took place. Decisive role in the birth of such a standard was played by the then US Secretary of State Henry Kissinger, who held a series of talks with the leaders of Saudi Arabia and other oil-exporting countries. He convinced them to switch to selling black gold exclusively for US dollars, promising political and military support in return. At the same time, it was suggested that the received petrodollars be placed in American banks at a decent percentage. By the end of the 70's. the monopoly of the US dollar as a currency of price and currency of settlement on the world market of black gold was undivided.
For four decades, the world has changed a lot. There were serious risks for dollar hegemony. An increasing number of countries have declared the need to free themselves from the dominance of the American currency, which has become a tool of political blackmail in Washington from a modest instrument of payments, settlements and investment. One of the priority directions of dedollarization is the transition of countries in international settlements to the national currencies of countries participating in trade and economic relations. The greatest opportunities here are those countries that are major exporters and importers of oil.
There are already many examples in the world of successful emancipation from the US dollar. For example, Iran. Due to the economic sanctions imposed by Washington, Tehran was forced into trade with other countries to switch to barter schemes, as well as the Iranian rial, the national currencies of the partner countries and monetary gold.
Another example is China. His desire to switch to the use of the yuan in international calculations is not due to economic sanctions, but to far-reaching plans of becoming a world economic and financial leader. Preparing for the replacement of the dollar with the yuan has been going on for a long time and unnoticed. An important milestone in this process was the receipt by the yuan of the status of the reserve currency included in the “SDR basket”. The decision was taken by the IMF in December 2015 of the year and entered into force on October 1 2016 of the year. The share of the yuan in this basket - 11 percent, he ranked third after the US dollar (40%) and the euro (31%), ahead of the British pound sterling and the Japanese yen. At the time of the yuan obtaining the status of a reserve currency, it was already part of the official foreign exchange reserves 38 from the central banks of the world 130.
Getting the status of the reserve currency by the yuan is an important, but rather symbolic event. There are no signs that some central banks rushed to increase the share of the yuan in their foreign exchange reserves. Over the 11 months after the IMF's decision came into force, the renminbi positions in international settlements and international reserves have changed little, they remain quite modest. According to the international settlement system SWIFT, in the middle of this year, the share of the yuan in international settlements was 1,98%. This is the sixth place after the US dollar (40,47%), the euro (32,89%), the British pound sterling (7,29%), the Japanese yen (3,16%), the Canadian dollar (2,04%). In August, 2015 of the year, the Chinese currency rose to fourth place in popularity for international settlements for the first time, ahead of the Japanese yen and the Canadian dollar. The subsequent collapse of the yuan’s position can partly be explained by the deterioration of relations between the United States and China after Trump’s White House.
Nevertheless, Beijing is struggling stubbornly to increase the share of the yuan in international settlements. At the beginning of the fourth quarter of last year, the number of countries-trading partners of China and Hong Kong, which carried out no less than 10 in RMB, reached 57. In two years, the number of such countries has increased by 7. In general, the number of countries that used the yuan in their calculations reached 101 a year ago.
One of the most notable steps in turning the yuan into an international currency has become the following events on the Chinese stock exchanges.
In early September, Chinese media reported that China started trading futures for crude oil. Futures contracts for oil will be traded on the Shanghai International Energy Exchange, and trading will be open to foreign companies. Trade in oil futures has already been successfully tested in the summer of this year.
In order to make this tool more attractive, customers will be given the opportunity to make calculations on it in gold. And for this purpose, on two Chinese exchanges (since April 2016 of the year in Shanghai and since July of 2017 of the year in Hong Kong) started trading in gold futures denominated in yuan.
Experts evaluate these events as revolutionary. After a while they can transform not only the Chinese, but also the world economy.
First, a phased dismantling of black gold trading based on the monopoly position of the US dollar may begin. Gradually, an increasing number of contracts for the supply of oil (not only futures, but also on a “spot” basis) will be in yuan. Other large exporters and importers of oil can follow the example of China, contracts can be expected to appear in Indian rupees, Iranian rials, Russian rubles, etc.
Secondly, the option provided by China to participants in oil transactions to convert revenue into gold futures is regarded by some experts as guarantees of the provision of the yuan by gold. And far-reaching forecasts are made of a possible revival of the gold standard, first in China and then in some other countries. I recall that in 1944, at the conference in Bretton Woods, the gold dollar standard was approved, which provided for a fixed content of the yellow metal in US dollars (35 US dollars per troy ounce of gold). In the Chinese scheme, the yuan is simply provided with gold, which can be purchased on the market. This, according to experts, is a model of a new “soft” gold standard.
For the sake of fairness, it must be admitted that China was not the first to start trading oil futures for the national currency. Such an idea was born in Russia a quarter of a century ago, the first attempts were made at the beginning of the 90-s on the Moscow Oil Exchange. Then they were unsuccessful. And here is the second attempt: 29 in November 2016, the trade for rubles was launched on the St. Petersburg International Commodity Exchange. On the St. Petersburg stock exchange, export futures trading was conceived, i.e. This is a platform for foreign buyers. It is assumed that prices for Urals oil will be priced in St. Petersburg; participants in transactions with Russian oil will finally be able to free themselves from being tied to the London price of the Brent brand.
So far, however, large-scale operations with ruble oil futures have not been noticed. This is understandable: the Russian currency is characterized by increased volatility. It can play speculators, but it is not convenient for those who need physical oil. The volatility of the yuan is significantly lower than the ruble. In addition, the yuan insured gold. In Russia, there is no gold supply for oil futures. As a result, the ruble is still only a “transit” currency, the ruble proceeds will be converted into dollars, euros, and other currencies. Russian exporters need dollars and other foreign currencies to cover their currency costs, which often exceed the ruble costs.
Today, China is the world's largest importer of black gold. The leading oil suppliers to China - Russia, Venezuela, Qatar, Angola, experts believe, will agree to switch to receiving Chinese currency for their goods without special objections. Iran has already done so. Saudi Arabia, a major supplier of oil to China, is under question. China, according to some sources, has long been conducting secret negotiations with Riyadh on the subject of settlements for oil in yuan. Experts believe that Beijing will be able to "put the squeeze" on Riyadh in this matter.
Oil is only the first sign in Beijing’s far-reaching plans to turn the yuan into an international currency. In the next ten years, much of China’s foreign trade may be in yuan. Exchange trade projects are already being prepared in RMB for such goods as natural gas, copper, and other non-ferrous metals. The People’s Bank of China will assist in bringing the yuan into the world orbit, which will support the stable exchange rate of the youth with the help of currency interventions (if required). Chinese experts expect that the dollar will be squeezed out by the yuan due to the poor outlook for the US economy, the large US trade and balance of payments deficit and the expected weakening of the US dollar.
The launch of trade in oil and gold futures on Chinese exchanges has led to many publications on the assessment of China's gold reserves. According to official data, the gold reserves of China at the end of August this year amounted to 1842,6 tons. It is the fifth largest in the world after the United States, Germany, Italy, France. However, Chinese statistics are cunning, Beijing does not disclose the true extent of the state’s gold reserves. Estimates by experts based on statistics of gold mining and foreign trade in yellow metal are several times higher than official data. Minimum expert estimates - 5 thousand tons. Often called the figure 10 thousand tons. And this is more than the official gold reserves of the United States, which at the end of August 2017 was equal to 8133,5 tons. In addition, there are large reserves of gold from banks, funds, private companies and the public. The total amount of gold accumulated in China is estimated at 20 thousand tons. Such gigantic volumes of the precious metal can be a good support for the yuan in the period of turning it into a world currency.