The first day of the St. Petersburg International Economic Forum (SPIEF) has seen various discussions on ways of ditching the US currency which dominates global trade. Veteran investor and two time Rogue Money guest Jim Rogers has noted that the US currency will likely lose its leadership status in the next decade.
“Dollar is going to be higher than now because the turmoil is coming. Then, it is going to be overpriced and people will look around and say, ‘America’s got the largest debt in the history of the world. It’s printing money as fast as it can,’” Rogers said at the Valdai Club’s discussion session, held as part of SPIEF.
The alternative is coming from Brazil, Russia, China, India, Iran and other developing countries, according to Rogers, who said these states have enough power to compete with the dollar.
Russian Finance Minister Anton Siluanov suggested the euro could substitute the dollar in Russia’s foreign trade if Brussels takes a stand against Washington’s latest sanctions against Moscow. “As we see, restrictions imposed by the American partners are of an extraterritorial nature. The possibility of switching from the US dollar to the euro in settlements depends on Europe’s stance toward Washington’s position,” said Siluanov, who is also Russia’s first deputy prime minister. The minister added that the Chinese yuan, Indian rupee, and Russian ruble can also play a greater role in trade.
The need for more ruble-yuan settlements comes as trade between Russia and China grows. Xu Sitao, chief economist with Deloitte China, told RT that China has become the largest export market for Russia since 2017, accounting for roughly 12-13 percent of Russian exports. - Russia Today
In just two months since China initiated a competitor to the London and Chicago oil markets with the implementation of their Yuan denominated oil contract, the Chinese have experienced a fantastic track record of success as their contract now controls 12% of this global market .
Yet oil is not the only commodity China seeks to dominate, and in fact was not their first in taking on the West. Back in late 2015, China expanded the Shanghai Gold Exchange to compete with the LBMA and Comex on gold pricing, and in just the past 2.5 years they have become the world's largest physical gold market.
So as the primary caretaker to the world in that market, it appears that China is ready to take their success from the yuan denominated oil contract and do the same for gold as on May 24, the London Metals Exchange (LME) announced that they will soon be instituting a yuan denominated gold futures contract which will compete directly with the dollar denominated ones out of both London and New York.
A metals futures contract denominated in Chinese currency may soon be launched at the London Metal Exchange (LME), according to the exchange chief executive, Matthew Chamberlain.
“At present, investors are trading our products in US dollars. We would definitely like to explore the possibility of launching products denominated in offshore renminbi,” Chamberlain said in an interview with the South China Morning Post.
The LME, which is owned by Hong Kong Exchanges and Clearing (HKEX), currently allows traders to use the Chinese currency as collateral. Last July, the HKEX stock market also launched yuan-denominated gold futures.
LME’s chief executive didn’t specify when the new metals contracts would start changing hands in London. However, Chamberlain is reportedly confident that yuan-backed futures contracts are destined for success, as the Chinese currency is becoming more and more used in global finance. – Russia Today
China's rapid success in the oil markets has come in large part from the United States implementing new policies of economic sanctions which have driven countries like Iran to sell their oil to China rather than to London or Chicago. And as more and more nations seek to divest themselves from dollar hegemony, switching over to both gold and the yuan is now a viable alternative as it protects them from said sanctions, and it also acts as a counter weapon against dollar dominance.