Moscow And Beijing Join Forces To Bypass US Dollar In Global Markets, Shift To Gold Trade

Tyler Durden's picture

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.

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TheReplacement's picture

I feel your pain.  As my way of disagreeing;)

The sanctions still stand.  US troops still on Russian border.  US still criticizing Russian "aggression" in Ukraine.  Russia being forced into the open arms of the duplicitous Chinese and their one world replacement 'federal reserve'.  Trump tweeting like a pantiless school girl about how unfair it is that the people who work for him are not loyal to the rule of law, the country, nor himself and how powerless he seems to be to do anything about any of it.  But hey, at least he had some good ol' fightin' words for the Freedom Caucus for acting on the principles he supposedly shares with them.

#MAGA

Let it burn.

BigJim's picture

I'm not arguing that the US isn't a mess. Or that Russia and China aren't being pushed into each other's arms because of sanctions. I'm arguing there's absolutely NO evidence to support the author's assertion that either country seeks to back their currency with gold.

SoDamnMad's picture

OK Russia,buy all our Chinese crap the Americans and Europeans are sick of and buy it with gold.

Sorry, we have good Russian smart phones that don't have the Android "back doors".

aurum4040's picture

Hey Jimbo all it takes for flexibility is the revaluation of the finite asset in correlation with the devaluation of infinite paper. Its not difficult. The key is a fixed amount of gold per financial agreement - golds actual worth is something else. 

RickyJabbour's picture

It won't be a 'country' that wants a gold backed trade, it will be a multinational company

sebmurray's picture

Unless they knew that a systemic failure was going to happen and wanted to set up an alternative system that is crash-proof. Having a functioning market that allowed trade backed by gold would insulate (to an extent) countries using it from a Western market crash, allowing them to recover much quicker

Mr 9x19's picture

https://www.rt.com/business/382017-russia-swift-central-bank/

http://russia-insider.com/en/politics_business/2014/11/14/01-32-30pm/rus...

 

http://russia-insider.com/en/ready-anything-russia-develops-alternative-...

 

long time known, to prevent usa to fuck monetary system  of countries pluged to swift, the only solution is, like einstein said, " you not fixe problems with thos who create em "

this remove power from usa, weaken their pressure ability for, the stability and the sake of the world.

usa must be shakled military & financiary to let other forces to balance.

like it or not, i don't give a fuck, you messed enough for the last century.  let trump make internal corrections, and stop saying world is against you, because you provoked it, you reap what you sow.  


Dugald's picture

And this gem......

        on Wednesday this past Wednesday....

                                                               never proof read your own shit....          

ATM's picture

Here is what you don't understand. It isn't gold that will appreciate in value. It is a STORE of value.

It is fiat currencies that will be destroyed by the printing that is happening all over the globe.

Gold retains value. An ounce of gold in the Republic of Rome 2000yrs ago bought a good man's suit. Today, to get a good man's suit it costs me about an ounce of gold. Gold endures, paper deteriorates.

BigJim's picture

You're not telling me anything I don't know, or haven't heard a thousand times before.

The fact is, gold is - in some circumstances - a preserver of capital. But since its high in 2011, it's been a destroyer of capital. You've lost capital if you bought gold in 2011.

Oh, you didn't buy it back then? Well done; neither did I. But that's besides the point. Gold's value goes up and down, too, and pretending Russia and China have announced they intend to back their currencies with gold is just goldbug fluffery, unsupported by any evidence the author provides.

They may well have contingency plans in place if the US collapses and takes the dollar down with it. But that's not the same thing. No country wants to go back to gold. It limits monetary authorities and vote-buying politicians' options.

DontGive's picture

I think its April fools.

If it's real, then 3-2-1 WOAR with the Ruskies and the Chiners.

BarkingCat's picture

Look, the jerkoff is talking to his 3 different personalities 

giovanni_f's picture

thecunt is back - (lousily camouflaged) Hillary bots all over the net

Chris Dakota's picture
Chris Dakota (not verified) Mano-A-Mano Apr 2, 2017 5:32 AM

 don't think so.

bob_bichen's picture
bob_bichen (not verified) Mano-A-Mano Apr 1, 2017 11:13 PM

ZH users may wish to write to abuse@zerohedge.com and request that the Serial Chronic SPAMMER (biblicism,wordpress,com) be banned in all his various log-ins. [stizazz, Mano-a-Mano, lexxus, techies-r-us, kavlar]

You see, stizazz, Mano-a-Mano, lexxus, techies-r-us, kavlar, etc. are ALL THE SAME PERSON in conversation with himself.

Truly bizarre.

And he has SPAMMED ZH forever, hundreds of times, and always the same "imaginary friends in conversation" schtick, promoting off-topic articles in his VIRUS- TROJAN-  and  SPAM-infected biblicism website.

abuse@zerohedge.com

DuneCreature's picture

Yeea'll, .. This is going to leave a mark.

I mean both the new gold bank and Badass Bob of the Board(er) Patrol.

You go, Bob, round up those sock puppets and deport them. .. All of'm. ........... Truly bizarre, truly bizarre.

Live Hard, Bob May Leave Some Deep Emotional Scars And Socks To Darn As Well, Die Free

~ DC v5.0

Joyo Bliss's picture

You're right ... bob's always bichen.

Muddy1's picture

This idea will NEVER work.  Afterall, I have it on good authority that gold is a barbaric relic.  SARCASM

BeanusCountus's picture

The $ is not kaput. But the drip, drip, drip of its demise continues.

kavlar's picture
kavlar (not verified) philipat Apr 1, 2017 7:15 PM

o boy, trouble.

DingleBarryObummer's picture

techies, mano, kavlar is one person spammer with multiple accounts.  Don't click on his malware laden biblicalinstitute link

Giant Meteor's picture

Yes, tis true, tis true, but you have to admit, that was one fine looking piece of technical graffiti  ..

The internets "street art."

BigJim's picture

I checked out the biblicisinstitute links a few months ago and didn't get any malware. Their spam and multiple personality schizoid banter is annoying, to be sure, but what evidence do you have that the site is "malware laden"?

Bay of Pigs's picture

You cares. They should all be turfed for clogging these threads with spam.

Giant Meteor's picture

Not at all opposed to that, although it doesn't seem to happen.

Who's in charge here! I demand to speak too the management!

Tyler, or weekend Tyler, show us a sign !

Been nice knowin y'all ..

espirit's picture

 

On weekends, the server gets clogged with trash.

 

http://cryptome.org/2012/07/gent-forum-spies.htm

  

83_vf_1100_c's picture

  The Tylers are dead or sunning on a Pacific Island. ZH is now owned and operated by MegaForumCorp Inc. and all they care about is click counts. No point in banning spammers if they generate clicks.

techpriest's picture

It's a Wordpress site. As a pro web developer, I will simply say that there are only two kinds of Wordpress sites: hacked, or will be hacked any minute now. Wordpress is the Windows ME of the Internet.

jefferson32's picture

But unlike Windows, WP is open source. What better open source alternative do you recommend?

Theosebes Goodfellow's picture

~"They are presumably also looking at combining their new SWIFT-equivalent Interbank payment systems, which would provide even greater (and mutually cross-beneficial) independence from the USD and immunize against the inevitable next round(s) of US bullying for not acepting everything the US wants, a/k/a sanctions."~

In a certain sense, the USA should feel like taking a victory lap. They've finally beaten their communist adversaries into adopting a strictly capitalist method of trade exchange by making them go to a gold standard.

WOOHOO, WE WON!

But we didn't. Or should I say, we haven't. The US has so whored its currency that we have forced these two great nations to come up with a way to circumvent the Federal Reserve's promissory note Ponzi scheme. They both know that the jig is up soon for this now century-old ripoff and it is time to return to "sound money".

Eventually, much sooner than later, the only ones left holding "the bag" of worthless FRNs will be IRAs, 401Ks and working -class saps, all waving their Chinese-made American flags at 4th of July parades whilst chanting "USA", "USA!!!".

Don't blame the Chinese. Don't blame the Russians. Blame your congress-critter. And most certainly, blame yourselves. You've raised a generation of village idiots. 

 

JRobby's picture

Price of GOLD!!!! (Laugh Track Deafening !!!!)

The CB's with th least GOLD fight the hardest to supress it's price. 

BobEore's picture

Actually, I'd prefer to stay rather farther away from both than your stated intention would require! There's something about the picture it induces that leaves me cold. Each to their own I suppose.

Interestingly, this is the second gold related post of this current week where author attribution has been mysteriously left out of the presentation. First, on the Sprott screed, now, this

article from Russian Insider, by a Luke Gromen. Why such shyness on the part of those who should be aspiring to the mantle of 'GOLD GURU'... as a previous generation of golden wonder boyz expires under the weight of serial false prophecies? On second thought, perhaps their hesitation is wise!

Drilling down into the content,

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...

one suspects our author must be new to this game.... of BRICS PROMOTION. Otherwise he would be - like the less naive of readers - flagging the ominous references to anti-money laundering and anti-terrorism, as something to be excised from our meme of Russia and China as white hat superheroes of the the coming world o peace n plenty! Central banks being, as those up to speed know... the same the world over, enforcers of the dictates of the moneypower. And that 'anti-terrorism' and 'anti-money laundering' are both cover phrases for

state-sponsored terrorism in the form of clamping down on all free movement of personal wealth - and a totalitarian manifesto against free markets and free people! Oh no... say it ain't so!

Yup... sorry Luke. It might have been better for all if the "China Meme" so beloved of those former gurus had just stayed dead n buried. Likewise, you've fallen down on the job by inserting

solve technical issues around China’s gold imports from Russia, and that details would be released soon

into this latter day resusitation of the dead. You are categorically NOT supposed to discuss those exports! In fact, I recently had the duty on these very pages of refuting the assertion of an eager goldbuglet that ...

"China and Russia's gold comes into the country but never goes out!"

Which was the keynote mantra of our expired GOLD GURU koo koo koos himself. When that fell apart due to the diligence of journos more interested in truth in media than pumpin metals... 

well.... nuthin lasts forever right? Look, Luke... take some advice from an ol hand... cool or not...

when in a hole, stop digging. Now shovel some dirt back onto that grave...and go find some real work. Grave-robbin is NOT part of the "new economy!"

 

 

 

 

 

Giant Meteor's picture

So are these central banks at war with each other, to grab the one ring too rule them all?

Btw , I am your upvote. Read this one several times ..

BobEore's picture

Yes GM, behind the mask of ONEMEDIA fake news narratives, we often spot clues to the real news. Perceptive readers realize, for instance, that Putin's weak spot has long been the Russian Central Bank as an outpost of the moneypower right in the heart of his authority. And the Chinese PBOC is hardly any different - being a direct policy tool of a "Communo-capitalist roader' regime which is just as controlled by Wall St/City o London as it was when Warburg and Co sent them all to gay Paris to learn the Marxian way to power!

The  opportune thing about this post being placed in the main body of the news stream here - as opposed to where one usually finds a "gold-bug" item on ZH,

up on the top banner where the gold promoters pay to play... is that here we find folks who actually care about - and follow - geopolitcal themes, with interest in actually penetrating the smoke n mirrors...

whereas Up There... the wacko world of bugdom rules the waves! Instead of "find the fact"... it's "stack the smack." Or some other cultish hypno-mantra.

So, even though it's Sunday, and the wackos come out in force, we have an opportunity to calmly review details from a FACT-BASED, rather than cheer-led special interest perspective. Since the ONLY tool that the wackos can muster is the vote button, I pay no attention to the thing, knowing that the absence of a reasoned rebuttal constitutes a white surrender flag of the kind which Wiley E would often wave in acknowledgement of the superior wiles of the bird.

Central banks are generally speaking - conniving with each other... and 'at war' with us. And their foot soldiers are paid media shills who blow smoke n hot air.

Neep Neep!

Giant Meteor's picture

Thanks for that, and I hate to say it Bob, but sometimes the obvious escapes me. Now of course I have been aware of the gold bug meme, as other memes, I mean it's meme city ..

Tend to be obsessed with US central bank, but Jesus H. of course , (understatement) they don't operate in a total vaccum, ie; for the reason (s) mentioned.

As late, I have been a bit "consumed" shall we say, with fake news disemination, which is pretty f'ing funny, because as you correctly point out, that's the easy part. I 'm down with the big picture,  but quality comments such as the ones you have here, and elsewhere tonight, are sincerely appreciated. Well done, much respect ..

Neep Neep, indeed ;)

BobEore's picture

Gettin harder n harder to get a line through. Lot's of timeouts and mysterious cut offs of the connection. Looks like Control is watching. Oh well, it's been a good morning. Think I'll lay off for a while.

espirit's picture

Well said Bob and G.M.

Weekends tend to clog with bandwidth restriction, so don't dismay.

Keep posting.

Scuba Steve's picture

Fuckkin A. .... Starting g to believe US common man interest lay with opposite US elite.

Game on fukkers ....

yogibear's picture

Hey globalist, go ahead and try to start WWIII.Russia has numerous 20 MT nukes that will fry you.

And those bunkers can also be comprimised as well, once Russia and China know where they are.

The Greek horse's picture

This means WW3 last person to go against the Rothschild bank was  Gaddafi We all know how that ended..

Croesus's picture

Exactly.

The US has the title of largest military budget...to go along with the largest debt title...all for a reason.

Justin Case's picture

"The US has the title of largest military budget...to go along with the largest debt title...all for a reason."

Along with muti billion dollar ships that can't sail on their own power, $1 trillion planes that have killed moar pilots than enemies, and very rich Oligarchy in the military arms manufacturers. Poor reliabilty equipment and poor tax payers. Efficient like Obama care. They spend lots of money but get little for it. US is weak and out of shape compared to Russia and China.

TheReplacement's picture

And yet, oddly enough, the richest of the rich lists are not full of MICs.  Oh right, someone is financing the deal and handling both sides of the transaction, for a fee...

Don't follow the money.  Go to the source.

Justin Case's picture

The only thing odd here is yoar inability to understand, obufusticating facts with yoar bullshit.

"Full of MICs?" Are those vitamins there son? Military Industrial Complex is an industry, and how you get full on that is rather hard to eat.

Where did ya follow the money to?

Giant Meteor's picture

Well it's an interesting thought experiment for sure ...

Gaddafi dies having a knife shoved up his rectum, by "the mob" Hillary laughed, the moneymen are waiting like vultures, as the small nation is apparently worse than a third world shithole  ..

i really don't think anyone is gonna be butt raping a Chinese / Russo alliance, then of course throw in a few wild cards ..

Ohhh boy, smoke em if ya got em ...