Leaving US Currency Behind: Russia and China Challenge Dollar’s Hegemony

Saturday, June 27, 2015
By Paul Martin

SputnikNews.com
27.06.2015

Moscow and Beijing are trying to undermine the financial hegemony of the dollar by conducting mutual payments in Chinese yuan and jointly challenge the existing ratings’ system, Japanese economist Fumikazu Sugiura said.

In October 2014, Russia and China signed a $25 billion foreign currency swap, expected to last three years. The move helped Moscow to overcome a difficult economic period following the plunge of Russia’s national currency. It also meant that Russia and China do not have to use US dollars in bilateral trade.

The swap is also beneficial for Beijing, since it guarantees that China’s export volumes to Russia will not shrink, the economist pointed out in an article for JB Press.

Although both countries use national currencies for 7 percent of their mutual trade operations, they are likely to proactively promote it more in the future. The trend could spell trouble for the dollar as the dominant global currency in the long run.

Following a deterioration of Russia’s relations with the West over the Ukrainian conflict, Moscow increased economic cooperation within BRICS, the Asia-Pacific region and Latin America. Russia and China are working to increase the frequency of mutual payments in rubles and yuan.

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