Russia and China agree to attack US dollar by trading in local currencies

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MOSCOW – Russian Finance Minister Anton Siluanov and Chinese People’s Bank governor Yi Gang on June 5 signed an intergovernmental agreement to use ruble and yuan in mutual payments.

The information was published by the Izvestiya newspaper on Friday, citing a letter from the Russian Ministry of Finance. According to the newspaper, the information on the agreement is in a letter from Deputy Finance Minister Sergei Storchak to the Chairman of the Financial Chamber Committee of the Lower House of the Russian Parliament, Anatoly Aksakov.

The letter was a response to Aksakov’s request to intensify the ministry in agreements with economic partners regarding the use of national currencies in transactions to “strengthen the country’s economic security.” The letter also notes that new mechanisms for payments in national currencies between Russia and Chinese companies were already under development.

Payment Systems

Aksakov, in turn, told the newspaper that one of the options could be to create Russian and Chinese analogues of the SWIFT payment system. An increase in payments in national currencies, however, would also require the creation of a market for ruble and yuan financial instruments, stressed the senior legislator.

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This, according to Aksakov, would allow the two nations to cover the risks of exchange rate fluctuations in bilateral trade. As a result, the share of ruble payments with China may increase from the current 10% to 50% in the coming years, the legislator estimates.

Three sources close to the Central Bank of Russia, in turn, told the newspaper that the Russian bank VTB and the Commercial Bank of China would be allowed to pay with national currencies.

Position of Moscow

Moscow has encouraged trading partners on a number of occasions to abandon dollar transactions, as the US uses the currency to pressure other countries to align the agenda with Washington.

In 2018, Russia got rid of much of the US public debt in the midst of one wave of sanctions, concentrating on buying gold. In recent years, Moscow has actively promoted the idea of ​​paying using national currencies with foreign partners.

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