Galt's Gulch

Russo-Chinese Currency Union

Posted by $ TimCutler 9 years, 4 months ago to Economics
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Chinese foreign reserves and US Treasury holding are down. Chinese trade surplus is up. Russia says it is not selling gold. Both countries are resentful that the US dollar is a reserve currency. Looks to me like a unified currency is in the works. Tell me why I'm wrong.
SOURCE URL: http://www.zerohedge.com/news/2014-12-19/just-what-china-buying

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  • Posted by Robbie53024 9 years, 4 months ago
    The major world commodity is oil. They would need to get OPEC and Venezuela (and Mexico and Canada) to convert payments to some other currency before a subversion of the Dollar as the reserve currency would be feasible. Does the recent price decline enhance or degrade that possibility? I would say it degrades. Is it purposefully to stave off a reserve currency switch? Who knows. It is definitely harming Russia and Venezuela and certainly isn't helping OPEC.
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  • Posted by $ TimCutler 9 years, 4 months ago
    I'm also thinking that the strength of the dollar will make it very difficult for non-US borrowers to repay their loans. A Russo-Chinese central bank could facilitate debt repayment for favored nation-clients. Nations like Greece are short dollars and oil, but China is meaningfully long dollars and Russia is definitely long oil.

    What better way to bash the West by re-organizing the global credit picture?
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  • Posted by Lucky 9 years, 4 months ago
    China, its government and its companies, are massively investing in agricultural land, businesses, mines and factories outside China. To my reading these transactions would not show in trade stats, the effect is seen in lower than expected holdings of overseas currencies.
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