“Pay attention to the clues. All the major networks are announcing to the public the US dollar’s no longer going to be the worlds reserve currency”.
01 – Russia in Negotiation with China for alternative SWIFT Bank system.
Posted by EXOGEN on October 10, 2014 at 9:00am
Russia and China, the two strategic Eurasian nations, are moving clearly to ultimately break free of the stranglehold of the Dollar System.
On September 10 high-level talks took place between the two countries discussing establishment of an interbank money clearing system independent of the US-controlled SWIFT payments system.
If enacted it would represent a major step in being able to defend their economies from Washington’s newly-developed weapon of financial warfare against a country that does not behave just as certain powerful circles want.
On September 10, Russia’s First Deputy Prime Minister Igor Shuvalov met in Beijing with his Chinese counterparts to discuss setting up a system of interbank international transaction clearing that would replace or could, in event of increased US and EU sanctions, replace the SWIFT interbank payment mechanism.
According to Shuvalov after his talks in Beijing he stated to the press, “Yes, we have discussed and we have approved this idea.”
Russia is reacting to the current escalating financial warfare being initiated via Washington economic sanctions against key leading Russians as part of the current Washington agenda of recreating the tensions and confrontations of the Cold War in their effort to drive a bloody wedge between the EU countries, especially Germany, and Russia.
This past March, under strong US pressure, the EU unanimously adopted a series of sanctions against key Russian individuals close to President Putin. The sanctions came as a response to the independence referendum in Crimea in which the vast majority, some 93% of voters opted to request membership in the Russian Federation and secession from Ukraine.
The Society for Worldwide Interbank Financial Telecommunication, SWIFT, is one of Russia’s primary links to the international financial system. Bloomberg reported that on August 30, ironically just after Russia had proposed in Minsk terms of a ceasefire between the Kiev Government and east Ukraine rebels, Prime Minister David Cameron’s government proposed that the EU escalate its Russia sanctions warfare by blocking Russian banks from SWIFT clearings.
Were that to happen, it would be tantamount to a declaration of full economic war between the EU and Russia. The consequences for the EU would clearly be devastating, something Washington or leading Wall Street circles would, no doubt, chuckle about in a kind of Schadenfreude. Already US-imposed EU sanctions against Russia have begun hurting the German economy significantly.
Blocking Russia from the SWIFT system would be very serious and result in equally tough retaliatory actions by Russia. Excluding Russia from SWIFT would cause problems in cross-border banking that would disrupt trade.
The latest Beijing talks reveal that Moscow is not naïve about the intent of certain Washington circles to escalate the pressures on Russia to a new Cold or even Hot War. China and Russia are also in discussions around creation of a new international credit rating agency independent of the politically-manipulated US credit agencies, Moody’s and Standard & Poors.
These moves between the two leading members of the Eurasian Shanghai Cooperation Council countries, and also the two major countries of the BRICS—Brazil, Russia, India, China, South Africa—follow the decision this July in Brazil by all BRICS states to found an alternative to the Washington-controlled IMF and World Bank, creating a BRICS Infrastructure Bank and currency fund.
Parallel to these moves to decouple from the chokehold of the dollar system, Russia and China are negotiating agreements to conduct major energy trade in their own currencies and not, as has been the accepted practice since the 1944 creation of Bretton Woods System, via the US dollar.
Since August 1971 when President Nixon decided to break the legal tie between the US dollar and gold, US power has rested on a system where, whether the dollar rose or collapsed, all nations would be forced to trade using US dollars for oil, commodities and ordinary trade.
When the Euro first challenged that “reserve currency” role of the US dollar after the 2008 financial crisis, Wall Street and the economic warfare unit of the Obama Administration, the Working Group on Financial Markets, known in Washington as the “Plunge Protection Team,” headed by the Secretary of the Treasury and including the Chairman of the Federal Reserve, Chairman of the SEC and Chairman of the Commodity Futures Trading Commission, coordinated what became the “Greek crisis,” de facto Washington and Wall Street full-scale financial warfare attack on the stability of the Euro, using the Federal Reserve, rating agencies, Wall Street-financed hedge fund speculators and the Treasury of the United States to create the Euro crisis.
The dollar rose dramatically as a result and the Euroland economies have been devastated and weakened ever since.
Clearly China and Russia and other key emerging economies have understood Washington’s new financial warfare weapon, perfected since the financial measures of September 11, 2001, allegedly against money laundering by international terrorists, but clearly applicable to all banks in the world today.
The world is nearing a decisive “tipping point” economically and financially and the creation of a joint Russian-Chinese alternative to SWIFT would add a large nail in the dollar coffin.
Washington and Wall Street are unlikely to accept that nail without responding. We are in a new era of global warfare since the US-financed Ukraine coup of February, 2014.
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”
First appeared Link: http://journal-neo.org/2014/10/10/russia-in-negotiation-with-china-for-alternative-swift-bank-system/
02 – China Currency Push Takes Aim At US Dollar. 10/10/2014.
China Currency Push Takes Aim At Dollar
David Marsh, Special for USA TODAY.
Protests over democracy in Hong Kong may be preoccupying the Chinese leadership, but a subject of still greater international importance is being played out this week behind closed doors in Washington.
China is bidding to enter the heart of global finance by establishing its currency, the renminbi, as part of an ubiquitous monetary unit used in official transactions around the world.
The issue of whether the Chinese should be part of the International Monetary Fund’s Special Drawing Right, the composite reserve currency used in official financing, is highly technocratic, but the political questions at stake go to the core of world money and power – and will be discussed, in the background, at the annual meetings of the IMF and World Bank in Washington this week.
The decision on a new SDR structure, to be made in the next 15 months, will influence how China and its currency can play a bigger part in driving world trade, investment and capital flows.
The renminbi could eventually challenge the dollar and its pivotal position in world money — which is why the U.S. government and Federal Reserve are examining this with intense interest.
China is unlikely to mount an open campaign to enter the SDR, grouping the main reserve currencies, the dollar, the euro (linking countries in European monetary union led by Germany and France), the Japanese yen and British pound, and is valued at around $1.5.
Beijing would prefer the question of recalculating the composition of the SDR, which comes up for review in 2015, to follow market developments, reflecting a big increase in demand for renminbi financing from private banks, central banks, traders, corporations and asset managers.
Many hurdles remain. These include the renminbi’s lack of formal convertibility for transactions that shift capital inside and outside the country, where Beijing is reluctant to abolish all controls.
In addition, China still has to release more statistics to the Fund about its monetary reserves and other matters.
However, Chinese measures over the past three years to liberalize and internationalize its currency, and a big increase in financial market interest in China, are pointing toward a broadening of the SDR’s composition from January 2016.
An additional factor is China’s own action to galvanize emerging market economies toward reforming word monetary arrangements. This includes the five-nation Brics group’s decision to set up the New Development Bank in Shanghai, potentially challenging the IMF and the World Bank.
As the world’s No. 2 economy after the U.S., China believes it is close to earning the status of a reserve money, the first time that an emerging market currency would attain this position.
Chinese entry into the “magic circle” has been advanced by the British government’s September decision to issue renminbi-denominated bonds, the first big government to take such a step, and allow the proceeds to be held as reserves by the Bank of England.
The main conditions for the renminbi to pass the SDR test are that it should be widely used in trade and be “freely usable” in international payments and asset management. Although a long way behind the dollar, the renminbi has made impressive strides recently and is challenging the euro in several key fields.
Next year’s planned review will touch, too, on the opportunity for the SDR to play a greater role on financial markets, for example in denominating bond issues.
The SDR has lost ground as a financial vehicle in the past two decades, reflecting the surging importance of international private sector capital markets. But with the addition of the renminbi, it may be about to make a comeback.
David Marsh is Managing Director of Official Monetary and Financial Institutions Forum, a London think-tank.
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