What does sponsored by BIS even mean? BIS gave some funding so they can attach their label to the program? I doubt BIS can actually affect mBridge at all.
Renminbi (RMB)/Yuan Appreciation & Internationalization
- Thread starter supercat
- Start date
That is the title. But if you read the article what it claims is that Russia has already moved about as much of its trade to the Yuan as they can. So now the growth should be more steady. Further growth will require an increase in trade activity.
This probably depends on the construction of new routes to facilitate trade. Namely railway transport, pipelines, and other such facilities.
This probably depends on the construction of new routes to facilitate trade. Namely railway transport, pipelines, and other such facilities.
supercat
Major
Not really, Russia's foreign exchange trading is almost 100% in yuan now.
Under pressure from the US, Iraq is forced to suspend RMB settlement
According to the German business news website "Bne IntelliNews", on the 11th local time, Moeen Al-Kadhimi, a member of the Iraqi Parliament's Finance Committee, told the Iraqi satellite TV channel "Al Forat" that Iraq was forced to decide to temporarily stop using the RMB for direct trade settlements due to instructions from the US Federal Reserve (Fed).
He said in a media statement: "The Fed has asked Iraq to stop using RMB transactions on the grounds that there are irregularities and certain problems in the transaction."
Kadhimi added that many decisions of the Central Bank of Iraq are imposed by the Federal Reserve. According to him, Iraq exports about 3.5 million barrels of oil per day, and the revenue from these oils is stored in the Federal Reserve Bank. However, these funds will not be transferred to Iraq in cash, but through transfers initiated by the Central Bank of Iraq. At the same time, the Federal Reserve must approve these transfers and related commercial settlements before the funds will be sent to the designated Iraqi entities.
Kadhimi pointed out that the business of the Central Bank of Iraq is largely affected by US instructions, which are often justified by administrative, financial and anti-terrorism aspects. In his view, these reasons are politically motivated and aimed at putting pressure on the Iraqi government.
Regarding the impact of stopping direct RMB settlement, Kadimi believes that traders and the Central Bank of Iraq still have multiple options, and they will not rely entirely on the US dollar, so this suspension is temporary and will not be permanent.
He also said that the Iraqi Parliament Finance Committee will urge the Central Bank of Iraq to resolve this issue as soon as possible and diversify its currency basket to provide more options for settlement for banks and Iraqi traders.
"Al Forat" introduced that since the beginning of 2023, the Central Bank of Iraq has implemented a number of measures to stabilize the national currency and the overall economy and alleviate the risks brought about by fluctuations in the exchange rate of the Iraqi dinar against the US dollar. At the same time, a new partnership with the global banking system, including the Bank of China, is established to promote import and export trade business.
According to reports, bypassing the US dollar and directly trading in RMB will help simplify and speed up financial transactions, reduce import costs, and prevent risks caused by fluctuations in Iraq's domestic exchange rate. Therefore, on February 22, 2023, the Central Bank of Iraq issued a statement announcing that it would allow trade with China to be settled directly in RMB to improve foreign trade financing and stabilize the exchange rate.
The statement said that there are two ways to settle trade with China in RMB: first, increase the RMB reserves of Iraqi banks that have opened RMB accounts in Chinese banks; second, increase the dollar reserves of Iraqi banks through the accounts of the Central Bank of Iraq at JPMorgan Chase and Singapore's DBS Bank for exchange of RMB.
"Al Forat" added that Iraq has been increasing RMB-denominated assets through Singapore banks to finance trade and imports with China, with a total of about US$12 billion per year.
Iraq is the second largest oil producer in OPEC and is highly dependent on the oil economy. Nearly 90% of the government's fiscal budget comes from oil revenues. This is the first time that Iraq, as a major oil-producing country, has allowed trade with China to be settled directly in RMB, which also indicates that the foundation of the petrodollar in the past 50 years may have begun to "shake".
Amal Ibrahimi, an official of the Iraqi Supreme Audit Committee, said at the time that the measures announced by the Central Bank of Iraq showed that the RMB is becoming increasingly important in the international market, and these measures will make trade between Iraq and China more convenient. Iraqi economist Mashhadani also told CCTV News that Iraqi businessmen hope to get rid of the control of the US dollar, and it is necessary for the Central Bank of Iraq to decide to switch from US dollars to RMB settlement in trade with China.
The reason for the adjustment of the Central Bank of Iraq's policy is not only the initial signs of "de-dollarization" in Middle Eastern countries and the steady and orderly advancement of RMB internationalization, but also because the United States strictly restricts Iraqi commercial banks' international dollar transactions.
According to comprehensive US media reports, after the end of the Iraq War in 2003, Iraq's US dollar reserves have been stored in the Federal Reserve, and the US Treasury and the Federal Reserve have significant control over Iraq's dollar supply. Starting in November 2022, the United States has implemented stricter supervision on Iraqi commercial banks' international dollar transactions, claiming that it is to "curb money laundering and illegal transfers of US dollars to Iran and other West Asian countries subject to severe sanctions."
Affected by this, Iraqi commercial banks are restricted in using the SWIFT system for transaction settlement, Iraq has difficulty in using its own US dollar reserves, more than 80% of US dollar transactions are banned, and daily US dollar transactions have dropped from US$20 billion to between US$200,000 and US$300,000. The shortage of US dollars in its domestic market has intensified, and the Iraqi economy is in trouble.
After allowing import trade from China to be settled in RMB, Iraq can directly exchange RMB with US dollars in the offshore market, or increase its RMB reserves through its banks in China, to purchase large quantities of daily necessities and manufacturing goods from China, thus alleviating the material shortage problem caused by restrictions on US dollar transactions in the country.
Losing a war has consequences
S&P Global believes that Yuan settlement of Saudi oil will rise.
The picture I posted shows the increased investment.