De-Dollarization Continues: China, Iran To Eliminate Greenback From Bilateral Trade

Tyler Durden's picture

The more Washington lashes out in anger at those who will not bow to the unipolar world order, the more the rest of the world fights back. As the launch of its Yuan/Gold-settled oil futures looms, China is escalating its de-dollarization scheme further by seeking a bilateral rial-yuan agreement with Iran.

As a reminder, nothing lasts forever...

The World Bank's former chief economist wants to replace the US dollar with a single global super-currency, saying it will create a more stable global financial system.

"The dominance of the greenback is the root cause of global financial and economic crises," Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank.

 

"The solution to this is to replace the national currency with a global currency."

The writing is on the wall for dollar hegemony. As Russian President Vladimir Putin said almost two months ago during the BRICs summit in Xiamen,

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

As Pepe Escobar recently noted, 'to overcome the excessive domination of the limited number of reserve currencies' is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan, and now, as RT reports, Tehran and Beijing are determined to find ways to avoid using the US dollar as a settlement currency in trade, according to a report by Iranian economic daily Financial Tribune.

The topic of de-dollarization was raised at a meeting between leading Chinese government political adviser Chen Yuan and Iranian central bank officials in Tehran.

“Rial-yuan’s bilateral monetary agreement can have a significant role in increasing the volume of trade between the two countries and in this regard, we have conducted a series of negotiations with the central bank of the Republic of China’s president,”  said the Central Bank of Iran’s Governor Valiollah Seif.

Tehran has been pursuing the goal of eliminating the dollar in its trade, and has been trying to sign currency swap agreements with a few target countries.

Chen said that Iran and China should develop their banking links and also underlined the unfairness of the existing financial system, dominated by a few developed countries. He added, other nations would do better if the unfair system is eliminated.

“We could use the experiences of European countries in establishing the euro as a common currency between many countries, which is not exclusively controlled by a single country. But until then, we need to utilize the maximum available capacities to expand our banking relations,” he was quoted as saying by the Iranian daily.

As Federico Pieraccini previously noted, until a few decades ago, any idea of straying away from the petrodollar was seen as a direct threat to American global hegemony, requiring of a military response. In 2017, given the decline in US credibility as a result of triggering wars against smaller countries (leaving aside countries like Russia, China, and Iran that have military capabilities the likes of which the US has not faced for more than seventy years), a general recession from the dollar-based system is taking place in many countries.

In recent years, it has become clear to many nations opposing Washington that the only way to adequately contain the fallout from the collapsing US empire is to progressively abandon the dollar. This serves to limit Washington’s capacity for military spending by creating the necessary alternative tools in the financial and economic realms that will eliminate Washington's dominance. This is essential in the Russo-Sino-Iranian strategy to unite Eurasia and thereby render the US irrelevant.

De-dollarization for Beijing, Moscow and Tehran has become a strategic priority. Eliminating the unlimited spending capacity of the Fed and the American economy means limiting US imperialist expansion and diminishing global destabilization. Without the usual US military power to strengthen and impose the use of US dollars, China, Russia and Iran have paved the way for important shifts in the global order.

The US shot itself in the foot by accelerating this process through their removal of Iran from the SWIFT system (paving the way for the Chinese alternative, known as CIPS) and imposing sanctions on countries like Russia, Iran and Venezuela. This also accelerated China and Russia’s mining and acquisition of physical gold, which is in direct contrast to the situation in the US, with rumors of the FED no longer possessing any more gold. It is no secret that Beijing and Moscow are aiming for a gold-backed currency if and when the dollar should collapse. This has pushed unyielding countries to start operating in a non-dollar environment and through alternative financial systems.

For China, Iran and Russia, as well as other countries, de-dollarization has become a pressing issue.

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cossack55's picture

The .gov is de-dollarizing my economy

Luc X. Ifer's picture

To see the farm one must leave it.

roccman's picture

But the free range chicken is not allowed to leave the farm. ;)

yogibear's picture

Hey Federal Reserve  Wonks/Banksters you can print all you want but eventually the US fiat goes to it's intrinsic value which is zero! 

Government needs you to pay taxes's picture

The current crisis is caused by banksters and their political puppets cheating/lying/stealing via fractional reserve banking, fiatbux, and Jew-E.  A global currency or .gov will be as effective as the fucking UN.  Where do I ship the hookers and blow?!?

weburke's picture

Other countries believed the head fake of globalization power sharing

bobcatz's picture

The US is pissing everybody off because of IsraHell.

Hence, the DEMISE of the US$ and Empire. http://wp.me/p4OZ4v-eK

Déjà view's picture

"Wars against smaller countries"...

WW ll...both Germany and Japan were and are slightly larger than Calif.

I Feel a little Qeasy's picture

"The solution to this is to replace the national currency with a global currency."

Replace US controlled toilet paper A with US controlled toilet paper B. 'Right' they'll say, that's just dandy. LOL.

Luc X. Ifer's picture

These warrants a nice war. Crypto trough the roof, next stop - Moon!

HRClinton's picture

My de-Dollarization started in earnest this year.

I trade my Bitcoins for gold bullion. Or for investment-grade diamonds.

With this combo of crypto, bullion and gems, I can do anything, anywhere. No Bank, Fed, or BIS is required.

These plantation owners can go and have sex with themselves. I am no longer their "Subject" (Vassal) or Debt Slave.  I am a self emancipated free man, with a 2nd passport.  :-)

What are you?

YouKnowMyName's picture

Take your one world currency and go to hell.

nmewn's picture

lol...nice handle.

What kind of gong is that? ;-)

Mustafa Kemal's picture

"Take your one world currency and go to hell."

The SDR?

Bitcoin aint never gonna be the one word currency. Theres LTC, Dash, and ETH and bunch others.

Now, USD? THAT is going to hell, and you can take that ride.

Bernie Madolf's picture

No worries mate.

RCCBs aren't gonna toss their golden goose

It will be a joint effort to devalue all fiat onward

White Devil's picture

Everybody in the world should convert to Shitcoins.

JibjeResearch's picture

Ladies and Gentlemen...

The pain is coming...

Get yourself a shitload of cryptos...

The Greenback will take a diarrhea..., come running like white water...

1. Pay attention to inflation ... of the everyday's supplies..

2. Between Metals and Cryptos, look for volatility/stability.  Stay away from stability shits.  Things will volatile upward.

3. Do not hold cash..

Enjoy the rollercoaster .. :)

Pearson365's picture

You'd better have some cash for a while anyway.  After the hurricane in FL, cash was king.

Mustafa Kemal's picture

"You'd better have some cash for a while anyway. "

True. 

yogibear's picture

With all the Fed's printing, (Zimbabwe style)a loss of confidence in the dollar would be devastating.

Even if they raised interest rates it wouldn't matter. Higher return of worthless money is still worthless.

Clock Crasher's picture

How dare they!  Send in the economic hit men/jackals/Marines in that order.  

2banana's picture

To be replaced by what?

A "basket" full of currencies?

Currencies like the Yuan, Rial and Ruble that have been worth ZERO several times in the last 100 years?

That are still today heavily manipulated?

++++

"The solution to this is to replace the national currency with a global currency."

chubbar's picture

exactly! Why the fuck anyone with an IQ above room temperature would think that combining 7 currencies (that are weak or outright suck) into 1 currency, would make that new currency something special that didn't suck? Also, who gets to be in charge of issuing it? Remember that old Rothschild saying about being able to issue a nations currency? That is the long pole in the tent that no one wants to talk about. Having a one world currency effectively negates sovereignty if it is fiat. If it is something that no country (or organization like NATO or the UN) can conjure out of thin air perhaps I'd rethink that statement, I don't know. Gold, as trade settlement, worked for a long time before the US played their fuck-fuck game with reserve currency status at Bretton Woods. If humans are in control of the quantity of it, it'll be used for corruption and geopolitical games.

I Feel a little Qeasy's picture

Don't blame us humans you numpty, remember which tribe does the printing.

earleflorida's picture

all (china, russia and iran) these countries have studied america's 'FRB System' since 1913 and have seen how it colludes with Britain and the Private Internationalist Bankers that make runs on foreign sovereign nations, bankrupting their monetary system at will!

the 'BRICS' have a fantasti advantage{?}!

they will coin their 'OWN' money and keep the interest to pay down their 'OWN' debt!!!

saving at min.a 100 (of) $BILLIONS[$] annually, once the nat'l. debt expands to accomodate putting moar money n the system or tightening themselves without a foreign entity outside the BRICS unit disrupting the easily liquid and transparen flow of capital.

RationalExuberance's picture

How can the US even compete? :)

earleflorida's picture

question? how the fuck can a 'gold-backed' petroyuan compete when its virtually impossible to settle 10s of $billions$ when 'promises-to-pay' are called in daily globally?

gold will either be pegged to the price of a crypto currency at par,... say $15,000 bitcoin/ gold oz.?

trailer park boys's picture

Economics isn't my strong point. Can someone explain how the US will suffer if the dollar isn't needed for global trade anymore?

Lost in translation's picture

mo’ FRNs coming to AmeriKa, we dun wan.

¡Mexicanos queremos!

/S

short screwed's picture

Inflation. Or even worse, stagflation.

booboo's picture

We get to enjoy our own inflation instead of exporting it..
Look on the bright side, you will be a millionaire.

Pooby's picture

Imagine if all the goods and services in the world were contained in one room. There was 1 million dollars divided amongst the people in the room. The total value of all goods and services would be $1,000,000. What would happen if you doubled the supply of money but the goods and services remained the same?

 Now imagine if you could get the people in 20 other rooms to also use your money; now you could print up more money and the inflationary effects would be greatly diluted. The people in those other 20 rooms would be absorbing much of that inflation. You could create a lot of new money to reduce the impact of recessions and depressions. You could distribute this new money amongst the people in your room and suddenly times are good again. BUT, what if the people in those other 20 rooms suddenly started using a different currency? All those dollars now have no use to them, while you are still using them in your room. So, that money will start flowing back into your room and all that inflation you never really felt before? Now it hits like a ton of bricks.

 

 That's about as well as I can understand it. It's hard to explain why this happening seems to result in gold dropping sharply and instead people are pouring money into ownership of a piece of computer code.

chickadee's picture

The Fed can absorb and destroy those dollars.

I Feel a little Qeasy's picture

Nonsense. They won't be given to the FED, (what would they give in exchange? More toilet paper?) Instead they will be used to make purchases, whatever they may be, but they will appear in your economy, make no mistake about that!

anonymike's picture

Most of the dollars in the world exist to support international trade. If that demand goes away, the supply becomes too large and its price (purchasing power) declines. That causes those outside the USA to no longer accept the losses associated with holding dollars. Dollars are then no longer accepted for purchases outside the usa, plus the dollar holdings are spent on whatever real assets can still be bought with them, increasingly only in the USA. The smart money will be buying real assets and not dollar denominated debt. The flood of dollars back home will cause price inflation. Then people in the USA won't want to hold them either, jacking up the velocity to create hyperinflationary conditions and the final collapse of the federal reserve notes that replaced real dollars a century ago.

Mustafa Kemal's picture

When people dont want your money, its not worth much.

Moreover, you cant bully other countries through sanctions as easily.

If its not needed for global trade, then it is not the petrodollar. That kept us afloat while spending for decades. Game is up soon.

earleflorida's picture

`'bitcoin' the foundation for solomon's (pyramid) temple!'

Lost in translation's picture

Uh oh...

I see B-2 bombers in their future.

Somewhere out there, Lee Greenwood is about to play.

I Feel a little Qeasy's picture

And I see mushroom clouds in yours, fuck-wit.

Blankone's picture

I thought they already were trading without the dollar now we find out they are just talking about it?

What is the hold up.

pizdowitz's picture

This is an all-out attack. The shit will hit the fan now sooner, than later.

And, as always, the current OmniPotentate will fail to see the threat developing, and when it does, it makes the wrong, and invariably defensive in nature, decisions, all too late, and all for naught. The issue here is "systemic response", alias panic, and has nothing to do with either the FED itself, or its string-pullers, or the will to survive. anything else for that matter. Think of Napoleon at Borodino (1812), or Hitler at Stalingrad (1942).

To all those praying for the demise of the FED. Your prayers are being answered.

I am Groot's picture

In the short run it will be catastrophic. In the long run this might be a good thing, I think. The industrial defense complex won't be able to bleed the US taxpayer dry anymore. Billions of taxpayers dollars should be going to roads, bridges, schools, hospitals, soc security, and border security. We'll have enough billion dollar weapon systems to protect us and us alone. Europe can go fuck itself and pay for it's own defense. Time to stop being the entire world's policeman.