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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BarkingCat's picture

Putin has weapons that Gaddafi could only dream of.

It does not matter whether the US or NATO has 10 times as much

It is like being inside a living room with a 12 gauge automatic shitgum and facing a guy that is carrying a M60 machine gun, like Rambo.

Sure, Rambo clone has the far superior firepower but in that scenario it is meaningless.  That shotgun will put enough buckshot into the target to leave nothing but hamburger behind,.

Justin Case's picture

"That shotgun will put enough buckshot into the target to leave nothing but hamburger behind"

Assuming buckshot boy sees the enemy first. Technology will win. Russia has it. Just look at the T50.

Russian SU24 fighter plane buzzed an American Aegis Cruiser, the USS Donald Cook, while the ship was near Russian territorial waters near the Crimean peninsula.   That Russian aircraft then proceeded to do the unthinkable by “turning off” the Aegis cruiser’s defenses using new state of the art Russian electronic jamming technology!
The plane then was able to do several simulated bomb runs at the helpless cruiser without one shot being fired from the cruiser itself… It was a shocking display of how far the Russians have come in terms of electronic warfare technology and a severe slap in the face to the American navy and the US government itself.

Peek-a-Boo, BOOM!!!

PlayMoney's picture

In 10 years instead of the Yuan being pegged to the dollar.....the dollar will be pegged to the yuan. DOH!

dizzyfingers's picture

TPTB games against Russia have consequences? How can that be! 

Meanwhile, central-banker wars proceed. https://www.lewrockwell.com/2017/04/louis-rouanet/the-war-on-cash-2/

 

Yog Soggoth's picture

And everyone crying Russian wolf is working for the owners of the fed, or just stupid.

new game's picture

you left us no choice(you dumb fuks). take your central banking system of fiat dolla reserve status and shove it up your collective MIC asses. and tell SA to fuk off too. we have enough oil and gold to set up the NEW PETRO GOLD RESERVE CURRENCY.

 did your think we were going to take your shit when we have the cookie? dumb fuks. oh, and by the way our milliatary defensive technology is moar than adaquate to protect our nation from your inferrior bloated and greed ridden shit...

ps. we are russians and we will blow you away with our stuff if you and the macstain bluff come and huffs and puffs anymoar.

did i say fuk off? trumpty dumpty sat on an imaginary wall and wheeled and dealed right into the hands of the dark state handlers and lost this deal because he is already owned and maff matters. loosers...

HRH Feant's picture
HRH Feant (not verified) Apr 1, 2017 7:16 PM

I said that China and Russia were collaborating a few days ago with CIPS as an alternative to SWIFT and AIIB as an alternative to the IMF. This is another go around for China and Russia.

It has been clear to me, for several years, that China has been accumulating gold for a reason.

The days of the USD as the world reserve currency are numbered. Will the world move to SDRs or to Yuan / Renminbi or both?

short screwed's picture

Agreed. One has to wonder how many days the New York Gold Comex has left as well.

Fester's picture

Did not know Japan was a top 4 gold producer. Hmmm

Pinto Currency's picture

90% of daily gold trading turnover is through the LBMA.
That is the major fraud as it pretends to be a real metal market.

Clint Liquor's picture

Why create an alternative to the IMF and then use SDRs?

Mat Cauthon's picture

China only used getting into the IMF basket as a way to legitimize their plan to internationalize the RMB.

Giant Meteor's picture

The protection rackets ....

Sweet ..

post turtle saver's picture

here we go with the "move to SDRs" bullshit again... do I need to explain yet again why that doesn't make any sense?

DingleBarryObummer's picture

please do, the floor is yours

<<gestures hand to the podium>>

Croesus's picture

The IMF is a US-controlled entity. In that light, would you expect the IMF to be "fair" in its dealings with autonomous nations like China or Russia, who have their own ideas of "what constitutes a 'fair' deal"?

Neither China nor Russia really NEED the US...

Russia has the resources...China has the productive capacity...the US? Has the debt, has the smartassed "I'm Special"-exceptionalism, and the PC-libtard bullshit that neither of them like, or want...and definitely didn't request.

"American" foreign policy has been like the neighborhood bully for a long time...and that gets old after a while.

The IMF's SDR, is not gonna happen. WW3 will, though.

R2U2's picture

"The IMF is a US-controlled entity."

Wrong. 

 

 

Giant Meteor's picture

Damn it man, they're just good at numbers ...

 

espirit's picture

Em I Jist dum, or ded R2U2 jist git moar downvotes then me?

Croesus's picture

@R2U2:

For your personal betterment:

"The U.S. government has by far the largest share of votes in both the IMF and World Bank and, along with its closest allies, effectively controls their operations. In 1998, the U.S. held 18% of the votes in the IMF and 15% in the World Bank. Together, the United States, Germany, Japan, the U.K. and France control about 40% of the shares in both institutions. With the rest of the shares spread among 175 other member governments, some holding a tiny number of votes, the United States is effectively in charge."

Source:

http://www.thirdworldtraveler.com/IMF_WB/WhoAreThePeople.html

Giant Meteor's picture

Correct, but I don't think that is what he was drivin at ...

;)

Justin Case's picture

SDR will level the floor for international trade and can't be manipulated as easily by countries seeking trade advantages by devaluing their local currencies.

Welcome to the one world currency. Expand that next to One World Bank and last but not least, one world Gov't.

post turtle saver's picture

thank you for the floor...

let me keep it simple for the "USD is dead any day now" crowd...

when I see a sentence that reads like this:

"The days of the USD as the world reserve currency are numbered. Will the world move to SDRs or to Yuan / Renminbi or both?"

my brain reads it like this:

""The days of the USD as the world reserve currency are numbered. Will the world move to <a basket of currencies that consists primarily of USD and is used by the IMF for accounting purposes only> or to <Chinese currency that is pegged to the USD as its index> or both?"

the first option tells me you don't know how the IMF and XDRs work, the second tells me you fail to recognize that China is tied to the USD at the hip...

overall, anyone and I do mean _anyone_ who thinks any country or set of countries is going to go back to a gold standard is deluding themselves... the whole reason we have the IMF is because of all the gold and dollar shortage crises back in the day... NO ONE IS GOING BACK TO THAT so get over it...

Justin Case's picture

The gold standard constrains Gov'ts ability to print unlimited amounts of fiat money. Therefore golds price would need to match that rise in value. This would be too revealing of inflation.

Money is defined as any good that is widely accepted in exchange for goods and services as well as payment of a debt. The functions of money are:
1/ A unit of account to measure the relative worth of goods and services;
2/ A medium of exchange;
3/ A store of value.

Money generated from a computer or a printing press is artificial money that nobody has worked for and because it does not match the basic requirement of a good, it does not have the physics of matter to act as a measure that can be used to value other goods or services.
This permits real wealth to be exchanged for pieces of monopoly paper.

Artificial money:
1/ Does not provide a physical unit of account to measure the productive value of goods and services;
2/ Does not provide a stable medium of exchange between nations;
3/ Does not provide a lasting store of value.

The Federal Reserve dollar is paper that has lost 97% of its stated purchasing power since it was introduced in 1913 and becomes progressively worth less and less.

At this point in time, everything in the world is "denominated" in currencies that have no use, except to complete the trade! Trillions upon trillions of digitized currency are currently being held for the "completion of commerce", extending out into other lifetimes! Of course we are speaking of any form of currency denominated debt, be it government or private.

The question that must be asked is: what and where is the wealth (asset) that we use to satisfy this quantitatively growing future debt?

As long as gold was the nation’s money, government spending in peacetime never exceeded approx. 4% of GDP. Government was but a footnote in most people’s lives, which is precisely as it should be.

Despite what is taught in social science courses, a true gold standard is a greater protector of individuals’ economic well being and, ultimately, their political liberty than any legislation or “rights” document ever penned.  Hard money limits state power!

Richard Nixon’s elimination of the last remnant of the gold standard over four decades ago combined with FDR’s earlier decree has fulfilled to the detriment of the American and world economies Baron Rothschild’s adage to a T.  The return of prosperity and individual liberty will only come about when both of these heinous acts are eradicated.

The only thing on earth we find that can equitably redistribute what remains of defaulting debt, is gold. It needs only to be priced high enough, in paper debt.

Yoar brain isn't firing on all cylinders.

Implied Violins's picture

It makes sense if the eventual goal is One World Currency, as the SDR will be an intermediary step.

Remember that Economist article back in 1988 that 'predicted' all of this? I think Brandon Smith has written a lot of articles on this.

If the BIS stays the same, or the BRICS becomes the new name but the people stay the same, then we have been PLAYED. 'One World Bank to control them all.'

Prediction: the FED will be audited; Japan's central bank will tank; Europe's various central banks will crash after Brexit and further exits...all a plan for an eventual one bank system - a digital, cashless system.

Giant Meteor's picture

Well likely either that or war ..

I guess we'll find out how insane the insane really are eh? Now on the bright side, if things take on the best possible attitudes, we'll see some major and justified casualties, would be a plus not to suffer too many collateral damages ..

All of course with the best case , and most plausible case, in mind ..

espirit's picture

I'd bet WWIII. Digital systems have no veracity.

All proven to be hacked.

Giant Meteor's picture

For my detractor ..

I left out smooth transition and local barter as viable alternatives .. small communities, common defense etc.

And SNAP. left that out as well ... keep the entertainments flowing, breadbaskets full, we'll be ok.

It's probably nothing.

espirit's picture

At times, 'what's his name' (Cipher?) was right, "I should have never taken the RedPill".

c2nnib2l's picture

Does anybody remember Peter Shiff video on Yuan replacing Dollar by the end of 2016 max 2017 ? :D 

GUS100CORRINA's picture

Yes ... the CHINESE think STRATEGICALLY. The Dollars dominance is probably about done. The reason the DOLLAR is done is because America is a DEBTOR nation.

We are about to find out if the GOLD is really in Fort Knox. 

Comex “Gold” Leverage Skyrockets to a SHOCKING 542:1 as of 2016.

The Russians and Chinese know it. Where on earth is the COMEX going to get the 542 ounces of physical gold for each physical ounce they have in the vault?

Good luck with that miracle.

Justin Case's picture

Where on earth is the COMEX going to get the 542 ounces of physical gold for each physical ounce they have in the vault?

They don't have to deliver any gold or silver or any other commodity. The contract states the CRIMEX has the right to cash settlement. Their price will become irrelevent for physical buyers of the metals. Two markets will evolve from this. Real gold and certificate gold, of which are proxies for metals. Which one would you like to own?

TheVillageIdiot's picture

SDRs. Already underway. That was the reason to create the AIIB AND include the Renminbi into the SDR.

ThirteenthFloor's picture

China is the manufacturing capital and export king of the world. If a gold based trade note was in place, China would accumulate gold through trade at a fast rate. So why buy gold now prematurely?

If China backed the CNY with gold, devaluation moving forward would be more difficult than it is today, which they do to maintain trade and production numbers. I would like to hear, how backing the CNY with gold helps China, other than reducing import cost of raw materials. A gold based trade note is more likely, with the goal to flush US treasuries out of the system, but in this case gold would flow to China, stacking gold now is a bit premature. I would guess China is finding the collateral value of UST which they use to buy US real estate less interesting.

espirit's picture

Velocity works well in all markets.

Meh. Physical, not so much.

Jus being practical.

Capitalist With A Razor's picture

 "I would guess China is finding the collateral value of UST which they use to buy US real estate less interesting."

 

Exactly.

 

 "I would like to hear, how backing the CNY with gold helps China, other than reducing import cost of raw materials."

 

It would appear the game via the Sino still applies.... Perhaps; the war is already before us. China's tactical nuke's are UST's that are meaningless in a Hot Theater and WAR is where the Empire most go. Russians know this better than anyone. So why not burn the fuse at both ends. Without a vote of the 50 various State Legislature(s)... America will be full throttle free fall as a republic..as the WAR Machine comes on. So why not? 

 


 


Justin Case's picture

RE: "I would like to hear, how backing the CNY with gold helps China"

There isn't any evidence to suggest that it is their motive. What is most likely is converting their USD holdings into real money, so when the USD craters they arent the bag holders. Very easy to convert gold into the currency they need, for trade. They may put a floor under the fiat currency by backing the RMB by a percentage of gold.

Average life of a currency is 60 yrs. With all the money printing, ZIRP, monetizing bonds, rigging the stawk markets, false economic stats etc., they have just postponed the collapse. Throughout history there has never been a fiat currency that survived as long as silver and gold. The dust bin of history has hundreds of currencies that have failed. There has never been an exception to paper money issued by Gov'ts. EVER!

GRDguy's picture

This is not an April Fool's joke.  It appeared in Hong Kong on 3/17/2017.

Another important piece of news you won't see on MSM.

About time ZH; but thanks for putting it up.

Giant Meteor's picture

Not an April fool joke .... ahhhhh, the irony eh ?

Smedley's picture

Bypassed the money changers and the decline of the dollar....smart...

:D

Giant Meteor's picture

Well I think so too , however, watch the US saber rattling grow more intense by the hour ..

DingleBarryObummer's picture

Trump will tweet something degrading towards Russia/China whilst on his golden toilet tommorow morning. 

Giant Meteor's picture

Lordy lordy, you are relentless eh?

Don't be so cheerful, 

Trump is mortal man, just like me, and I am assuming you as well.

You know, on a long enough timeline, all that ...

Say some prayers, or just throw up to the heavens a good thought or two, it won't hurt ya ...

And God Damn stop obsessing over a grown man's bathroom habits, for Christ sakes!