China And Japan Dropping Dollar Cross Rate System, Will Transact Directly

Tyler Durden's picture


While various three letter economic schools of thought continue sprouting left and right, in an attempt to validate endless spending predicated on one simple thing: transitory reserve currency status, and we emphasize transitory, reality moves on, oblivious of what economic theoreticians believe it should be doing. As Yomiuri Shimbun reported last night, China and Japan are set to launch direct currency trading, bypassing the dollar, and the associated benefits and risks, entirely. "But how can that be?" dollar purists will scream. After all, when one bypasses the dollar, one commits blasphemy to a reserve currency. Somehow we think China gets that. From the AP: "Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, according to reports. With the planned step, exchange rates between the yen and the yuan will be determined by their transactions, departing from the current "cross rate" system that involves the dollar in setting yen-yuan rates, Kyodo News said on Saturday."

More specifics on how the world's second and third largest economy will just say no to dollar hegemony:

The two governments are eyeing setting up markets in Tokyo and Shanghai, the Yomiuri Shimbun said.


The yen-yuan exchange system would help businesses in the world's second- and third-largest economies reduce risks associated with exchange rate fluctuations in the dollar and cut transaction costs, Kyodo said.


It will be the first time that China has allowed a major currency except the dollar to directly trade with the yuan, Kyodo said.

As usual, why spend time commeting with words, when a simple chart will suffice.

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Sat, 05/26/2012 - 11:31 | 2465314 Fips_OnTheSpot
Fips_OnTheSpot's picture

Go home $!

Sat, 05/26/2012 - 11:49 | 2465378 vmromk
vmromk's picture

Oh, oh Bernank, you just got bitch slapped.

Get ready to launch the swaps bazooka on Tuesday you motherless cowardly piece of human dog shit.

Sat, 05/26/2012 - 12:11 | 2465429 CrazyCooter
CrazyCooter's picture

Has anyone seen a running list of these agreements, or better yet a graphic? I recall Russia and China already did this. There is the Iranian "anything-but-the-dollar" oil bourse. I have read that a non-SWIFT system is forming.

I am sure there are others because I haven't been keeping count...



EDIT: If y'all wanna crowd source this, fee free to post under with links/citations of non-dollar trade policies between sovereigns.

Sat, 05/26/2012 - 13:05 | 2465551 markmotive
markmotive's picture

China is dealing with its own domestic crash. Japan won't be selling anything to them after a while...

Sat, 05/26/2012 - 13:30 | 2465612 Aziz
Aziz's picture

How did the dollar die?

Slowly at first. Then quickly. 

Sat, 05/26/2012 - 13:47 | 2465668 Abitdodgie
Abitdodgie's picture

"How did the dollar die?" Slowly at first and then painfully slowly

Sat, 05/26/2012 - 14:23 | 2465741 francis_sawyer
francis_sawyer's picture

Hey! Look over here... Gay marriages!

Sat, 05/26/2012 - 15:37 | 2465792 Ahmeexnal
Ahmeexnal's picture

You gotta know how to read between the lines. Yes, China-Japan trade dumps the dollar, just as India-China, Russia-China, etc. They now trade DIRECTLY bypassing the dollar. *silence* cricket chirping *silence* Whatever happened to the eurocolonialists pipedream of a european currency as the new reserve currency? Answer: the euro global reserve currency was aborted before it was even born. It died while still a foetus INSIDE the eurozone womb. Germany peddled the euro to Chile, Brazil and other non-euro countries 10 years ago. They were skeptic. They were right to be so. Germany is now again peddling a european based global currency, this time to countries like Haiti, El Salvador, Nicaragua, Bangladesh, "Palestine", Nigeria. They have outright laughed at Merkel's face. Inside rumors describe Bilderberg in PANIC mode.

Sun, 05/27/2012 - 01:27 | 2466724 Deo vindice
Deo vindice's picture

Any inside rumours from Bilderberg are either:

a) just that - rumours, or

b) deliberately misleading information to create the effect they want.

Sun, 05/27/2012 - 08:20 | 2466910 lactam
lactam's picture

unless that's what they *WANT* you to think


Sorry, couldn't say that with a straight face

Mon, 05/28/2012 - 00:29 | 2468506 FEDbuster
FEDbuster's picture

One more straw on the camel's back, crack in the dam, etc....  There are shit clouds in the sky, a shit storm is a coming.

Mon, 05/28/2012 - 12:31 | 2469485 MichaelNY
MichaelNY's picture

I don't know where you've been, but in many places around this planet it has already been raining shit.

Sun, 05/27/2012 - 07:39 | 2466888 supermaxedout
supermaxedout's picture

No other country  nor the Eurozone wants to overtake the role the Dollar plays till present.  The way the Dollar executed its power on the smaller currencies of this world was on the other side the reason why the Dollar is now dying. The Dollar was winning till he was dead. (Hat sich totgesiegt.)

Nobody with a clear mind wants to follow such a bad example. Currency exchange rates in the future are going to be established in a very different way as its is done now. Now its done simply by market manipulation  in the US/UK dominated so called finance markets. But these are no markets from the very begining. These so called markets are just a platform to demonstrte to the public, that the rates shown on the boards are derived from a free market, while they were simply set by Wahington via Wallstreet.


Sat, 05/26/2012 - 21:44 | 2466464 greensnacks
greensnacks's picture

Trevon Martin is a much better distraction that simpletons can be outraged about. Guns, race, youth, violence, community leaders, self defense - it has it all. Now only if George Zimmerman was a gay Catholic, butler,

Sun, 05/27/2012 - 09:05 | 2466955 Element
Element's picture

And look in France ... a "Friends of Syria" conference ... calling for military intervention!

Sat, 05/26/2012 - 13:38 | 2465638 flyme
flyme's picture

China is credit swapping with everyone, reconnecting them all into its system. It's just a matter of time, before a full dollar fiat fall. If they continue it won't really matter even if the dollar does a reset.

Sat, 05/26/2012 - 15:29 | 2465818 Ahmeexnal
Ahmeexnal's picture

NSA is now monitoring anyone who searches/types "Mexico" on the internet.  "John Corzine", "vaporized" and "birth certificate" also on the blacklist.


Revealed: Hundreds of words to avoid using online if you don't want the government spying on you (and they include 'pork', 'cloud' and 'Mexico')





there's someone at the door...brb

Sat, 05/26/2012 - 15:58 | 2465881 Day_Of_The_Tentacle
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Conclusion: The entire ZH community is under survaillance then with listed words like Response, Crash, Riot, Wave, Collapse, Exposure, Toxic, Bust, Erosion and China. Oh Haaay DHS ;-)

Sat, 05/26/2012 - 16:33 | 2465929 azzhatter
azzhatter's picture

I wonder if you use Timmy Geithner and cocksucker in the same sentence gets you spied on? I believe it's his middle name

Sat, 05/26/2012 - 17:56 | 2466079 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

There was a storm with snow and ice on my flight from Tucson to Mexico, I could see erosion on the interstate caused by a flood. I thought I might get stranded so I reached out for help at the airport but no luck. There was a telecommunications failure so I couldn't let you guys know. Now there's a big cloud over the facility because of a leak in the roof. They say the waves are still good in Sinaloa and that's the target of my surfing vacation, I hope they don't crest before I arrive. So watch TV in case the authorities have a response, my flight might still get cancelled. Not too smart to travel during a blizzard, I know, good thing I brought some homegrown!

Sun, 05/27/2012 - 13:10 | 2467290 DanDaley
DanDaley's picture

G-man:  "We knew you were all criminals when you started using words."

Sat, 05/26/2012 - 12:10 | 2465430 Colombian Gringo
Colombian Gringo's picture

Yep, who needs the stinking dollar when it is controlled by the worlds most evil criminal banksters.

Sat, 05/26/2012 - 15:05 | 2465789 LeBalance
LeBalance's picture

please discuss how the other currencies fall outside of the force you mention. lol. they do not.

Sat, 05/26/2012 - 15:58 | 2465883 SilverDosed
SilverDosed's picture

I always thought it was the chinese that taught us how to play the paper ponzi game in the first place?

Sat, 05/26/2012 - 21:45 | 2466469 Bringin It
Bringin It's picture

Kubla Khan's paper money deal, backed by the invincible [at the time], Mongol army was a lot like our dollar, to wit - "Take this paper as payment or get sliced up."

Sat, 05/26/2012 - 14:03 | 2465707 vast-dom
vast-dom's picture

i'll trade you 2 cesium sushi rolls for a bottle of human hair derived soy sauce, in either currency, at a later agreed upon time after tomorrow.

Sat, 05/26/2012 - 18:08 | 2466098 goldfish1
goldfish1's picture

As J. Wellington Wimpy would say, "I'll gladly pay you Tuesday for a hamburger today."


Sat, 05/26/2012 - 18:46 | 2466167 vast-dom
vast-dom's picture


Sat, 05/26/2012 - 19:06 | 2466197 vast-dom
vast-dom's picture




Sat, 05/26/2012 - 19:55 | 2466267 Ahmeexnal
Ahmeexnal's picture

MSM picking up on this latent ELE only means one thing.

It was nice reading y'all while it lasted.

Gotta dig me a nukular shelter skelter.

Sat, 05/26/2012 - 20:51 | 2466370 Snidley Whipsnae
Snidley Whipsnae's picture

No Western Media organization, including ZH, ever discusses the SCO... If discussion of the SCO and it's goals were discussed this news about Japan and Australia beginning trading in their respective currencies vs the dollar would not come as a surprise to anyone...

Hello ZH!!! Lets talk SCO...

Sat, 05/26/2012 - 11:34 | 2465325 Pairadimes
Pairadimes's picture

So endeth the Fed's ability to export inflation. BOHICA.

Sat, 05/26/2012 - 11:37 | 2465337 Sudden Debt
Sudden Debt's picture

Raw materials... As long as those are traded in dollars the house will keep standing.

So if australia for example would start a love affair with china....

Sat, 05/26/2012 - 11:43 | 2465363 Caviar Emptor
Caviar Emptor's picture

Not likely. But keep your eye on those Tajiks 

Sat, 05/26/2012 - 15:45 | 2465839 Temporalist
Temporalist's picture

Friday, 23 March 2012

Australia-China currency swap really is a big deal


From the Reserve Bank about 3.20pm, news of the first bilateral currency swap that China has done with an advanced Western country.

Today, the Reserve Bank of Australia signed a bilateral local currency swap agreement with the People’s Bank of China (PBC). The agreement allows for the exchange of local currencies between the two central banks of up to $A30 billion or CNY 200 billion. It is for an initial period of three years and can be activated by either party.

The main purposes of the swap agreement are to support trade and investment between Australia and China, particularly in local-currency terms, and to strengthen bilateral financial co-operation. The agreement reflects the increasing opportunities available to settle trade between the two countries in Chinese renminbi (RMB) and to make RMB-denominated investments. It follows the decision by the Chinese authorities last November to allow convertibility between Australian dollars and Chinese yuan in the interbank market in China.”


Australia and China sign currency swap deal
Posted: 22 March 2012 1528 hrs

"The People's Bank of China has signed currency swap deals with a range of other countries including Turkey, the United Arab Emirates, and Malaysia."

Sat, 05/26/2012 - 18:07 | 2466095 Ahmeexnal
Ahmeexnal's picture

I sense a huge dislocation in the PM markets at the next open in Asia.

Magic 8-ball responded with NO-BRAINER when I asked if I should stack  some more before that happens.

Sat, 05/26/2012 - 21:17 | 2466418 Snidley Whipsnae
Snidley Whipsnae's picture

Brazil/China are already trading raw materials in their local currencies... as are many other SCO members.

Hello ZH... Let's talk SCO.

We hear enough shit about Greece/Troika/EU/IMF every fucking day. It's tiresome.

Let's talk SCO, that's where the action is moving toward.

Are you guys scared to talk SCO?

Sat, 05/26/2012 - 12:02 | 2465400 Manthong
Manthong's picture

I wonder what kind of world this would be if JFK had stayed around long enough to defend his silver dollar?

Sat, 05/26/2012 - 13:45 | 2465664 DosZap
DosZap's picture

I wonder what kind of world this would be if JFK had stayed around long enough to defend his silver dollar?

And his END around the Fed, printing United States Notes.

I personally think that is what got him murdered.

Sat, 05/26/2012 - 13:56 | 2465690 tmosley
tmosley's picture

Everyone would be dead from being hit by all the magic bullets he kept dodging.

Sat, 05/26/2012 - 12:20 | 2465453 cranky-old-geezer
cranky-old-geezer's picture



We export government debt and debased currency.

World superpower?   Not much longer.

Sat, 05/26/2012 - 14:05 | 2465710 Whiner
Whiner's picture

That announcement must a sounded to Bennie and the Jets like the racking of a 12 gauge to a house burglar moving quietly in the dark of night in the home.

Sat, 05/26/2012 - 15:47 | 2465853 Temporalist
Temporalist's picture

The big export is arms, the biggest in the world for a long time.  Exporting war is good business in the US.

Sat, 05/26/2012 - 11:36 | 2465330 Sudden Debt
Sudden Debt's picture

Silver and gold will bite the dust.... NOT!!!

Sat, 05/26/2012 - 15:57 | 2465879 peekcrackers
peekcrackers's picture

“Fiat money has no place to go but gold,”

Alan Greenspan 2010





Sat, 05/26/2012 - 11:36 | 2465331 veyron
veyron's picture

The only question I have is: why didn't they do this sooner?

Sat, 05/26/2012 - 14:21 | 2465345 Sudden Debt
Sudden Debt's picture

Why does everybody always say "I'll clean up the garage NEXT week honey!

People are lazy...

At least I am

Sat, 05/26/2012 - 13:52 | 2465680 TWSceptic
TWSceptic's picture

They just finished reading Peter Schiff's latest book:

Sat, 05/26/2012 - 11:36 | 2465332 RopeADope
RopeADope's picture

China has more influence on Japan than the US so it makes sense that the yen replaces the dollar as a reserve currency.

Sat, 05/26/2012 - 11:37 | 2465336 THX 1178
THX 1178's picture

Fukushima might do that idea in.

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