China Moves To Further Marginalize Dollar: Offers CNY-Denominated BRIC Loans

Tyler Durden's picture


Today we observed how as the US is considering releasing crude from its Political, pardon Strategic Petroleum Reserve, China was doing just the opposite. Now, in a further step confirming that China is acting as a much more rational capitalist power, and is rapidly encroaching on the "reserve" status of the sacrosanct USD, the FT writes that China intends to extend renminbi loans to other BRIC nations in "another step toward the internationalisation of its currency." To those following the stealthy Chinese incursion into currency markets as a dollar alternative, this is not news: already we know that China and Japan have bypassed the dollar entirely and now engage in direct bilateral trade using JPY and CNY (even as most other nations in Asia have developed bilateral agreements to transact in a non dollar basis). This is merely the latest incremental step which will see China become the dominant player in the currency arena, and further puts to doubt the fate of the US Dollar as the default currency. Of course, the market will not acknowledge any of this until the developing (i.e., non-insolvent world) is transacting entirely with US intermediation. And at that point, the US will be merely another Zimbabwe case study, where it can print all the money it wants to fund its deficit, and the only ones who care will be wheelbarrow manufacturers.

From the FT:

The China Development Bank will sign a memorandum of understanding in New Delhi with its Brazilian, Russian, Indian and South African counterparts on March 29, say people familiar with their talks. Under the agreement CDB, which lends mainly in dollars overseas, will make renminbi loans available, while the other Brics nations’ development banks will also extend loans denominated in their respective currencies.


The initiative aims to boost trade between the five nations and promote use of the renminbi, rather than US dollar, for international trade and cross-border lending. Under 13 per cent of China’s Asia trade is transacted in renminbi, according to Helen Qiao, chief Asia economist for Morgan Stanley. HSBC estimates that the currency’s share of regional trade could swell to up to 50 per cent by 2015.


BNDES, Brazil’s development bank with a loan book about four times the size of that of the World Bank, and South Africa’s finance ministry said they expected a master agreement to be signed in New Delhi that would include the lending pledge, with details to be ironed out during a summit. “We will discuss the creation of structures and mechanisms for lending in local currencies in order to maximise economic and financial transactions between the countries that are members of the accord,” BNDES said.


CDB declined to comment. Other signatories will include Russia’s Vnesheconombank, Export-Import Bank of India and the Development Bank of Southern Africa.

Next up, China announces that it was only kidding about its gold holdings, which suddenly are reported to have doubled or tripled, and the trap will be officially srpung.

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Wed, 03/07/2012 - 17:17 | 2233540 SheepDog-One
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Taps for USD on the pipes and snare....alas, we hardly knew ye.

Wed, 03/07/2012 - 17:22 | 2233575 Pladizow
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There was also the story some time ago of China issuing bonds.

Why does the largest creditor nation in the world need to borrow?

Wed, 03/07/2012 - 17:26 | 2233593 Dr. Engali
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Why wouldn't you if the cost of borrowing is nothing? It's like 0% financing. I sure as hell ain't going to spend my money when somebody else will loan it to me for free.

Wed, 03/07/2012 - 17:28 | 2233607 Pladizow
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Sorry for not making my point more clear - the Chinese issued bonds to start getting the world accustomed to transacting in their currency.

Wed, 03/07/2012 - 17:58 | 2233719 Sean7k
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I would suggest that in order to become a reserve currency or to encourage trade in your currency- there has to be enough of it to trade in. Bonds allow for the creation of currency. If you create a big enough market for your bonds- bond markets can begin to trade in them as well. 

It has taken time for China to develop enough trade relationships to allow for the transactions to be in Yuan. This is the next step to break from the dollar peg, thus keeping the US from inflating its' currency's value. 

Having a substantial gold/silver backing and the selling of US treasuries will further cement their currency position. 

The US knows this, yet doesn't implement these types of policies. This is the better question- why? Where are the Elites taking the US ? If it was onto bigger and better things, we would have a better foundation for economic stability.

Wed, 03/07/2012 - 18:03 | 2233745 Pladizow
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There can be no NWO with a super power in it, i.e., crisis by design!

Wed, 03/07/2012 - 18:12 | 2233789 Sean7k
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C'est possible.

Wed, 03/07/2012 - 19:36 | 2234062 trav7777
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there is no way either Russia, Brazil, or India need the CNY.

This is merely for each nation to trade in their own currency.  They aren't going to use the CNY as a fucking reserve.

Why the hell would Russia of all nations want or need the fucking yuan?  They have enough oil exports to demand trade in rubles and tell china to fuck off.  Brazil as well is an energy exporter.

Wed, 03/07/2012 - 19:47 | 2234088 cranky-old-geezer
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Actually there can be no NWO if the west's anglo white race bankers lose control of the world financial system. 

And that's what the east clearly wants to do, end the west's financial system dominance. 

To do that they must take the US dollar down from its world reserve currency status.  That's the biggest step, and the only step actually.  Once USD loses WRC status, that's it for America as a superpower.  The Euro and EU will collapse soon after (if it hasn't already collapsed).

Western anglo white race bankers know this.  They know their control is about to end.  They know USD is about to lose WRC status.

It's why they're looting everything they can now, and the looting wlll get worse leading up to USD collapse.

But the sheep don't know it.  Like many sheep here.  Like RoboTard and MDB and sheep like that who see nothing but stock market gains. 

They have no clue the bottom is about to drop out of the dollar.  

And by the way, Iran is the battlefield where western bankers prevail and maintain USD superiority, or lose and watch USD fall.

Thu, 03/08/2012 - 01:23 | 2234489 Questan1913
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Yes, game over soon regardless what happens to Iran.  If spread evenly over US society the loss of WRC status would drop our living standard by 25 percent roughly, but I do believe most of the losses will be concentrated within the elites of financealization fraud where the haircut will be horrendous.  I won't be shedding any tears.

Thu, 03/08/2012 - 00:06 | 2234704 trav7777
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white anglos like Rothschild and the Fed board huh?

Wed, 03/07/2012 - 17:57 | 2233724 bbq on whitehou...
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Careful sometimes what we think is free, just an't so. To use Mark Twain.

Wed, 03/07/2012 - 18:06 | 2233756 Dr. Engali
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Well that's true they just embed the cost someplace else.

Wed, 03/07/2012 - 17:24 | 2233585 Ruffcut
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"Can't wait to shit a bric or two for some food, sir."

Wed, 03/07/2012 - 17:32 | 2233620 JPM Hater001
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Clever.  I see what you did there.

Wed, 03/07/2012 - 17:56 | 2233713 SilverRhino
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That's a neat predatory trick too.   Price out loans in renmembi (artificially deflated currency) and when the time is right let the Renmembi appreciate like mad against other currencies.  Instant debt slavery for BRI countries.


Thu, 03/08/2012 - 00:08 | 2234706 trav7777
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volumes on these bonds are infinitesimal.

Big nothingburger.  The yuan is NOT going to EVER be the WRC.  China will be forced to hold BRL to get commodities and RUB to get oil.  They will both hold each other in reserve.

Wed, 03/07/2012 - 17:17 | 2233546 Tsar Pointless
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Wait - does this mean we will have a bang-bang shoot-'em-up war with China by EOM, too?

Wed, 03/07/2012 - 17:19 | 2233551 SheepDog-One
SheepDog-One's picture

I hope so! Im bored with these FED assclowns! Lets get some excitement and mushroom clouds goin here!

Wed, 03/07/2012 - 17:21 | 2233564 Tsar Pointless
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You had me at "mushroom clouds", SD-One!

I wish I could quit you!

Wed, 03/07/2012 - 17:48 | 2233656 Koffieshop
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Wait - does this mean we will have a bang-bang shoot-'em-up war with China by EOM, too?

No. Nobody is THAT stupid.

However it does make open war with Iran more likely. This news suggests the US is running out of moves fast as the ponzi is almost up. Invading someone who doesnt have working nukes sounds like the proper, desparate, last-resort move to me.

Wed, 03/07/2012 - 19:09 | 2233990 Iconoclast
Iconoclast's picture

Yep, added to that the USA underpin their fiat by stealing oil, kinda like an oil standard..

Thu, 03/08/2012 - 14:44 | 2236744 matrix2012
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Iconoclast, did you mean: THE STANDARD OIL GROUP ???

An interesting read below...

"Another thing that most people don't know about is the ROCKEFELLERS CONTROL OF THE STANDARD OIL GROUP which includes under their umbrella EXXON, CHEVRON, PHILLIPS, MARATHON, BP, AMOCO and others. They also control major American banks like Chase Manhattan, and others. They founded the TRILATERAL COMMISION and (through Mandell House) the CFR (COUNCIL ON FOREIGN RELATIONS). They set up fake "philantropist" foundations to fund organizations and causes that make them more money and further their globalist agenda as well as put up money for shills that feign opposition (Chomsky, Buchanan, Nader, Moore, various environmental groups, etc) but really subvert any real resistance to the new world order agenda. They and other uber capitalists even had a huge hand in funding the BOLSHEVIK REVOLUTION in RUSSIA and perpetrated the whole "cold war" hoax. I really could go on and on but I'll just leave you with those as a few examples. I mean forget about any "freemasons", "zionists", "jesuits" etc type of theories as to who is really pulling the strings. Just follow the money trail and you'll see that its the Rockefellers and a few other oligarchical families and cabals that are THE TOP OF THE FOOD CHAIN in creating this sick destructive NEW WORLD ORDER that is a conspiracy against ALL people, cultures and races. 

I had always been leery of Allen and his work because of his close association with the JOHN BIRCH SOCIETY (I think its open to debate but a lot of evidence points in the direction of the JBS being a shill/controlled opposition organization) but this book helped bring a lot of things into focus for me as far as deciphering the globalist agenda/conspiracy so I have new found respect for the man. GARY ALLEN should be held in high regard along with ANTONY SUTTON and EUSTACE MULLINS as people who did the leg work that exposed much about the NEW WORLD ORDER conspiracy that other writers are selling books and riding the coattails of."


Read over The Rockefeller File (1998) and None Dare Call It Conspiracy (1971) by GARY ALLEN here!



Wed, 03/07/2012 - 17:19 | 2233557 RSloane
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It only makes sense for them to do this. I'm surprised it isn't happening at a much more frequent rate.

Wed, 03/07/2012 - 17:25 | 2233587 mayhem_korner
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"happening" or "being leaked"...?

Wed, 03/07/2012 - 17:34 | 2233627 JPM Hater001
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Mayhem you sage.  Are you suggesting the Chinese are doing something behind our backs?  With out head squarely up our ass you would thing we would see something.

Wed, 03/07/2012 - 17:42 | 2233652 RSloane
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They've already negotiated contracts with countries not in BRIC to purchase goods, including minerals, using that country's currency. They're not doing anything behind anyone's back, we're just not paying attention.

Wed, 03/07/2012 - 17:43 | 2233659 mayhem_korner
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I see nothing!  I am not here!  I didn't get out of bed this morning!  (Sgt Schultz)

Wed, 03/07/2012 - 17:20 | 2233560 robertocarlos
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So sorry. This my garden now.

Wed, 03/07/2012 - 17:23 | 2233578 Pladizow
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Are you referring to ALL US farmland?

Wed, 03/07/2012 - 17:41 | 2233651 LawsofPhysics
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Farmland is up 600% in some locations around us.  Sellers only accepting gold.  Those of us still in business will be all too happy to accept Gold instead of dollars for the next load of soybeans sent to China.  fucking bring it.

Wed, 03/07/2012 - 18:15 | 2233790 sethstorm
sethstorm's picture

Cut off China's (preferential) access to the US then, whether it be directly or through intermediary.

Wed, 03/07/2012 - 20:10 | 2234214 DanDaley
DanDaley's picture

No, they would be happy to nuke the left and right coasts but keep the midwest farm-belt as nice as possible.  After all, they have 75% more people to feed than the US and desertification is eating up China.  

The US is like the flirty virgin who walked into a BA biker bar and is now going to have to pay for her big mistake.

Thu, 03/08/2012 - 00:11 | 2234711 trav7777
trav7777's picture

China is like a skank with cancer and Hep C.  Have you seen their country?

They're incapable of nuking the east coast anyway at the present time.

You talk about desertification and now they're going to take us over?  They're too STUPID to not destroy their own country but wise enough to conquer us? 

We are going to starve them all to death.

Wed, 03/07/2012 - 17:21 | 2233566 Iwanttoknow
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Can any one recommend a good online site to buy silver coins?The one i use will not sell less than 200 ozs.

Wed, 03/07/2012 - 17:21 | 2233572 tekhneek
Wed, 03/07/2012 - 17:24 | 2233584 Pladizow
Wed, 03/07/2012 - 17:45 | 2233663 Silver Dreamer
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I highly recommend Provident too.

Wed, 03/07/2012 - 19:17 | 2234015 Iwanttoknow
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Thanks a lot.

Wed, 03/07/2012 - 19:21 | 2234024 Iwanttoknow
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Thanks a lot.Much appreciated.

Wed, 03/07/2012 - 17:24 | 2233580 Boston
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Gainesville Coins

Texas Precious Metals

Wed, 03/07/2012 - 19:17 | 2234017 Iwanttoknow
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Thanks a lot.

Wed, 03/07/2012 - 17:28 | 2233605 Ruffcut
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Hey, fucktard Iwannaknowhowtosuckballs, go figure it out you troll bitch from fuckville.


Wed, 03/07/2012 - 17:29 | 2233611 mayhem_korner
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...and for you, we recommend  Seems you're a dose or two behind.

Wed, 03/07/2012 - 19:18 | 2234019 Iwanttoknow
Iwanttoknow's picture

Ruffcut, Take your meds on time.

Wed, 03/07/2012 - 17:29 | 2233610 Augustus
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Ebay works well for quarters and half dollars that are not "collector" coins.  Very little to no premium over spot with little shipping costs.  Pretty good assurance that it is not counterfit and then made to look aged. 

Wed, 03/07/2012 - 19:19 | 2234020 Iwanttoknow
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Wed, 03/07/2012 - 17:31 | 2233614 Winston Churchill
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Wed, 03/07/2012 - 19:23 | 2234031 Iwanttoknow
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Thanks.I'm proud to consider ZH as my primary source of financial news.Also (most) Zhers are great people.

Wed, 03/07/2012 - 17:35 | 2233632 JPM Hater001
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No.  call my friends over at American Rare Coin in Bloomington, MN.  No sales tax if shipped out of state. (952) 314-6661   I have gotten very good service and competitive over spot.
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