Renminbi (RMB)/Yuan Appreciation & Internationalization
- Thread starter supercat
- Start date
The real domino theory in practice. Who would have though it would happen with the RMB instead of with socialism.
Maybe with RMB socialist movement might have a real change in the global south again.
Not sure if anyone posted this, but Adam Tooze wrote a good article summarizing why this time it might be different for countries moving away from the dollar.
TLDR: America as an energy exporter flipped the usual script so for the first time in a long while we're seeing higher commodity prices = higher USD demand instead of the inverse.
So it's a double whammy crushing much of the world economy. Combine that with interest rates and debt.....
So not fear of sanctions as much, but actual physical need for countries to look for an alternative.
The people who seem to think countries sticking with the dollar is some sort of litmus test for supporting democratic values/warped loyalty for America are going to be unpleasantly (or pleasantly?) surprised.
TLDR: America as an energy exporter flipped the usual script so for the first time in a long while we're seeing higher commodity prices = higher USD demand instead of the inverse.
So it's a double whammy crushing much of the world economy. Combine that with interest rates and debt.....
So not fear of sanctions as much, but actual physical need for countries to look for an alternative.
The people who seem to think countries sticking with the dollar is some sort of litmus test for supporting democratic values/warped loyalty for America are going to be unpleasantly (or pleasantly?) surprised.
more RMB trading with Thailand has been mentioned a lot in the past few weeks
btw, also need to hear more about this with Vietnam and Indonesia
btw, also need to hear more about this with Vietnam and Indonesia
Updates on how much China/Russia raw commodity trades are now in RMB
I figure from this, Russia has a lot of excessive RMB. China may still be taking its imports in USD in some cases I guess. But it's a lot easier to change commodity trading from USD to RMB than getting every contract for other products to change. The amount of CIPS payment and increase is the other important factor here. I would imagine Russia's trade with Pakistan is also done through CIPS now. All figures not captured in those SWIFT reports
I figure from this, Russia has a lot of excessive RMB. China may still be taking its imports in USD in some cases I guess. But it's a lot easier to change commodity trading from USD to RMB than getting every contract for other products to change. The amount of CIPS payment and increase is the other important factor here. I would imagine Russia's trade with Pakistan is also done through CIPS now. All figures not captured in those SWIFT reports
PiSigma
"the engineer"
I would think all RMB trades are by CIPS regardless of the country. So all those by Brazil, Argentina, Pakistan, Russia, and even India if they get forced to buy oil in RMB will disappear from SWIFT data.
In two years the Americans will think they are the largest trading nation again because China will stop all trade in USD, so doesn't count. Lol
Saw Paul post this, good progress with Latam countries
btw, the quoted tweet has a very serious flaw
worth reading this from Mish Shedlock
btw, the quoted tweet has a very serious flaw
This seems like something that can be fixed over time when there is enough incentive on the table, which there is now
worth reading this from Mish Shedlock
This is something I have not thought about,
Mish's comment about how foreign bank depositors are not covered by FDIC and are in fact put in line behind bond holders is quite important. If the news of this gets out, there will be massive capital flight out of several US banks.
I would not trust the EU to try to get out of SWIFT any time soon however. They already gave up on trying to circumvent the Iranian sanctions for example. The current leadership of the EU is basically a wet noodle and jumped wholly in bed with US policy. SWIFT was originally controlled by the EU nations to begin with. It only slipped into US control because they allowed it in the first place.
I would not trust the EU to try to get out of SWIFT any time soon however. They already gave up on trying to circumvent the Iranian sanctions for example. The current leadership of the EU is basically a wet noodle and jumped wholly in bed with US policy. SWIFT was originally controlled by the EU nations to begin with. It only slipped into US control because they allowed it in the first place.
SWIFT is irrelevant, it's a payment processing method. De-dollarisation is what counts.
It doesn't matter what the EU say or do. If major EU companies start writing contracts and taking payments in yuan because of inflation induced depreciation of the dollar/euro is bad business that's good enough.
It doesn't matter what the EU say or do. If major EU companies start writing contracts and taking payments in yuan because of inflation induced depreciation of the dollar/euro is bad business that's good enough.