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“China’s RMB Yuan has overtaken the once almighty JPY and became the world’s 4th biggest currency after the USD“–Paul Ebeling
Just In: Sberbank, Russia’s largest lender just received a license from the central bank to issue digital assets to clients. Sberbank said the move would allow Russian firms to mint digital assets and “invest their currently idle funds to generate income.”
Now, SWIFT, the international payment system, must now use the RMB Yuan, which has become the 4th biggest currency after the Buck. the EUR and the Swissie. Long considered speculative, the “renminbi” has been undergoing a full transformation. Such volumes of transactions make it attractive to alternative investors in search of refuge values. While the torments suffered by the Russian rouble and the Russian economy are causing tremors in some markets, the RMB Yuan’s stability at this time is very revealing.
The monetary resilience of China and its authorities has come on by concentrated efforts on encouraging and pushing for more international business transactions to be made in yuan for over 20 yrs now. Its currency’s recognition is now established.
And with that, China is moving to transcend SWIFT so as to be no longer dependent on the network that the West controls and avoid one day suffering the systematic demolition of its economy.
This is why for many yrs it has been working to install and improve its own concurrent international payment system for the renminbi — Cross-Border Interbank Payments System (CIPS). It has over 1,200 associate institutions across 100 countries. The volume of transactions has increased by nearly 25% in 2yrs, reaching about $8.8-T. The goal is to end America and Europe’s absolute domination over the means of payments; that is Key for any economy and wherever SWIFT holds sway with it boasting over 11,000 members across the globe.
Russia represent a Key opportunity for China, which is gradually giving its consumers more access to credit and debit cards issued by Chinese banks. While Visa, Mastercard, and American Express have suspended their operations in Russia.
The economic integration of the 2 nations is fundamental shift that started in Y 2014 after the invasion of Crimea. It marked the beginning of the 2 countries’ combined efforts to reduce the Buck’s role in their bilateral trade actively.
Today, while the dollar’s role has decreased by no less than 50% in the trade between the 2 nations, financial agreements have also been signed between their central banks to extricate themselves from their dependence on the West.
The sanctions recently imposed on Russia are making disenfranchised countries like Iran and/or Venezuela seriously take stock. We believe that it will send them running into the arms of China, its banking system, and its CIPS network.
To do this, their central banks are moving towards holding a significant portion of their reserves in RMB Yuan, like Russia, whose war chest is 15% in Yuan.
China is profiting from its predominant position to trade with, work with, and fund countries under embargo, like Iran and NKorea. Without worrying at all about hypothetical sanctions against it because it will never take shape. The US will never overstep this red line with a country that will soon become the biggest economic power in the world.
The message from Beijing is clear: China will support Russia totally, thus providing a certain level of comfort to any nation that is chastised by the US.
China is laughing, as the country is becoming more and more attractive, while the US and the West abuse the financial system and the Buck by using it as a military weapon.
Editor’s Note: I maintain my prediction, made 20yrs ago that the RMB Yuan will account for at least 10% of global foreign exchange reserve assets by Y 2030, currently it accounts for about 2% of global foreign exchange reserve assets, and will be the world’s 3rd reserve currency.
Have a happy, healthy, prosperous weekend. Keep the Faith!