Hegemonic Stick
About the new currency aspirations of the Middle Kingdom told the newspaper "The BRICS Post".
The submission indicates that China is actively trying to convince the International Monetary Fund that the time has come for the yuan to become a new key currency along with the dollar and the euro.
An employee of the Chinese Central Bank said that the country is negotiating with the IMF to include the yuan in the special drawing rights basket (SDR). “We hope that the International Monetary Fund is ready to fully incorporate the achievements in the internationalization of the yuan and include this currency in the SDR basket in the near or foreseeable future,” said Yi Gang, Deputy Governor of the People’s Bank of China.
The publication reminds that by the end of this year, the IMF will once again revise the basket of currencies that fund participants form to use as their reserves. SDR is a tool for exchange of currency reserves in the global economy. Credited by the International Monetary Fund to the accounts of the States Parties to the SDR represent the financial requirement for exchange for foreign currency at any convenient time for the country. Currently, SDRs are calculated in dollars, and the nominal value of borrowing rights is based on the value of a basket of currencies (yen, dollar, pound sterling, and euro).
With regard to the inclusion in the basket of the yuan, the PRC must meet the criteria of an international lender, and also receive the support of the majority among the IMF member countries.
Meanwhile, as early as in 2013, the yuan became the world’s number two currency in the financing of world trade, ahead of the Canadian and Australian dollars. Last year, the yuan entered the top five major world currencies with which payments are made.
Well-known US analyst and entrepreneur Jeff Berwick prophesies dedollarization of the world economy, the coming collapse of the American financial empire and even the “isolation” of the United States (“End Of American Empire: De-Dollarization Will Isolate The US”).
According to the expert, the American Empire comes to an end today. Every day there are new signs of the collapse of the monetary system, in which the United States is still “driving”.
The author believes that both China and Russia have already advanced quite far in forming alternative systems to the dollar, which ultimately will lead to the de-dollarization of two large economies. Russia, for example, can launch a full-fledged alternative to the international payment system SWIFT, which includes 91 credit organization. The new service will allow Russian banks to freely conduct transactions through the Central Bank of Russia. The Russians are taking these actions because of Western sanctions, which may in the future lead to the disconnection of Moscow from SWIFT. If the shutdown does happen, Western companies will suffer serious losses. The alternative Russian system can reduce the negative consequences for Russians caused by Western sanctions. In addition, the new system will reduce the "Western financial domination over Russia," the analyst writes.
Further, the author with irony reminds that the USA is in crisis. The collapse of the empire is not far off. Many citizens do not understand that the government leads them by the nose. It is easy to deceive the population, especially such a “one fourth of which believes that the sun revolves around the earth.”
Today, not only Russia and China, but also some US allies are distancing themselves from the US dollar. The other day, the French Minister of Finance announced that the dollar is not needed for payments in Europe. Moreover, he said that the time had come to operate with the currencies of large developing countries, which accounted for more and more of world trade.
Living in the United States will soon become much more difficult, the analyst predicts. The American economy will have to compete with the whole world. Americans' wages will inevitably fall. She is already falling. Over time, the United States will generally be isolated.
By the way, besides the possible transition to an alternative own payment system, Russia can connect to the Chinese payment infrastructure.
In an interview with Bloomberg TV, the head of VTB Group, Andrei Kostin, said that over time, instead of SWIFT, Russia will be able to use the Chinese payment infrastructure (Chinese International Payment System, CIPS).
"In time, yes, but not now," - quotes his answer TASS.
“The international financial system is not very convenient for us, because it is a threat to our security. We will definitely work closer with our Chinese colleagues to develop alternative systems, ”he said.
As recalled by Tass, China can launch an international payment system that focuses on the yuan, rather than the dollar, in September-October 2015.
As for the Russian equivalent of SWIFT, the project was prepared by the Ministry of Finance of the Russian Federation and the Central Bank in August last year. The Russian system is an analogue of the global interbank financial messaging exchange system SWIFT. The new service was first launched in December 2014.
In late December, the Bank of Russia provided credit organizations with a new service for the transmission of financial messages in SWIFT formats for domestic operations. When concluding a contract, the service allows credit organizations to send messages in SWIFT formats through the Bank of Russia in all regions without restrictions. "The new service has been implemented in order to ensure the uninterrupted and secure transmission of financial messages within the country and is another step towards improving the system of services provided by the Bank of Russia," CNews statement of the Central Bank.
Finally, the American press.
Mark Dubovits and Jonathan Schanzer (Mark Dubowitz and Jonathan Schanzer), who in no way can be called admirers of Russian politics (both see the “aggressor” in Russia), in The Wall Street Journal They write that because of the American measures "the opponents of Washington began to" develop independently. " Not only that, they apply “economic weapon". And it did not start yesterday.
Here are some facts. In 2010, China banned the export of rare earths important to the electronics industry in Japan. Beijing has repeatedly used economic and diplomatic pressure to challenge Taiwan’s international recognition. Soon, China may supplement its naval exercises in the South China Sea with measures of economic coercion aimed at Vietnam, the Philippines and other Asian countries in order to secure property rights to oil and gas reserves in disputed waters. In the meantime, the Russians are working closely with China ... “In short,” the authors write, “America and its allies are vulnerable. Yes, economic interdependence has probably made the opponents of the West cautious, but their behavior may change if China, Russia and Brazil decide to challenge American global economic domination. ”
So far, US dominance in the world means that the rules of the game and sanctions in the financial sector are set by Washington. However, the dominance and the possibility of implementing coercive measures depend on the US dollar exchange rate. At the same time, US Treasury bonds should be a completely safe security for investors. “Fortunately,” publicists note, “87% of international trade is still held in dollars, and 61% of world currency reserves are expressed in dollars.”
“But this will not last forever!” Experts immediately exclaim. A number of countries and institutions are already exploring dollar-free alternatives. Even the International Monetary Fund is working on an alternative global reserve asset (the above mentioned special drawing rights), and this will reduce the share of the dollar in the basket of currencies and increase the share of the yuan. There are other alternatives, such as the UnionPay China Interbank Credit Card Association: with its help, Russia could bypass US sanctions.
They are afraid of analysts and the development of the Russian alternative to SWIFT. Such an alternative, which would be supported not only by Russia, but also accepted by China, will challenge the global financial order. And this "may represent a serious contradiction to American interests."
As we see, let us add, the coming collapse of the dollar system and the infringement of “American interests” became the topic of the day not only for representatives of the alternative press in the US, but also for eminent analysts like Mr. Dubovits, who, by the way, works in the Washington Democracy Foundation (Foundation) for Defense of Democracies).
Undoubtedly, sanctions, as well as a claim to eternal hegemony in the world, will be met (and are met) by active opposition, which will become stronger the more states will be involved in it. Sanctions are a double-edged sword, and a hegemon can get a second end over the top of its head. So much to get that it comes to life only in “isolation.”
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