/ world today news/ Russia began to seek payment in its own currency, instead of US dollars or euros, for energy trade with the “enemy countries” of the West – a justified action to counter the large-scale financial sanctions imposed on the country by the US and its allies . After the announcement of the news, the ruble appreciated significantly, writes author Wen Shen.
This is a bold and wise move – a tanto for tanto type measure against the world’s big bully that relies on its market size and status as the world’s reserve currency to threaten, coerce, bully and take advantage of the weak and disadvantaged situation. Now is the time for change.
It should also inspire other economies around the world to imitate the Russian government by processing trade between nations in their own currencies, rather than in a third-party surrogate currency like the US dollar.
In recent weeks, many encouraging examples have emerged where major trading powers have begun to require bilateral trade to be processed in their own currencies. For example, India and Russia have agreed on a rupee-ruble swap scheme to trade crude oil and other products, and Saudi Arabia and China are reportedly discussing using the Chinese yuan to process oil purchases.
In fact, the rapidly changing global geopolitical landscape is forcing many governments to rethink the viability, and most importantly, the fairness and fairness of the current global financial system, in which the US dollar has played a dominant role since the end of the CES.
Since late February, as the situation in Ukraine worsened, non-Western countries and their leaders, wealthy industrialists and private individuals, as well as academics and national security strategists, were astonished to learn that the US government, along with its allies, had thrown Russia from the SWIFT International Financial Messaging System.
The West went to extreme lengths to freeze all of Russia’s overseas assets denominated in US dollars, euros and Japanese yen. Even Switzerland, a well-known neutral nation for a long time, followed suit by freezing the Swiss bank accounts of Russia and its citizens.
What has played out before the world public in the last few weeks is a stark illustration or demonstration of the US-dominated financial coercion and hegemony of the West. Combined with its military might, Washington and its allies have designated many countries from various political systems as “rogue countries” and imposed crushing financial sanctions on them. These countries include Iran, Syria, Venezuela, Cuba, Zimbabwe and North Korea.
Now Russia, the world’s largest country by territory and ranked 11th in GDP (5th in GDP PPP), is being targeted.
The US and its allies have relied on the SWIFT regime to amass their wealth for many decades. The unilateral trade and settlement system unduly favors and strengthens the US dollar, the British pound and the euro, helping the developed Western economies continue to rob the natural resources and cheap labor of all developing and underdeveloped countries around the world.
And at the height of the unprecedented US-China trade war in 2019, which was instigated by the former Trump administration, Washington also threatened to “disengage from China,” with some hardliners in that administration and the US Congress proposing to kicked China out of SWIFT.
As a colossal economy of over $18 trillion, China needs to be on high alert and have a set of contingency plans in place in case the US and its allies decide to confront China.
The US government has presented China as one of its main strategic rivals, promising to take any measures to limit the further economic growth of this country.
In parallel with the SWIFT regime, the People’s Bank of China, i.e. central bank, developed the country’s own trade settlement system, called the Cross-Border Interbank Payment System (CIPS), which can provide independent trade payments and currency transfer services for Chinese and other non-Chinese financial institutions.
And in recent months, CIPS has been well received and witnessed a period of faster development. Now around 1,300 banks and financial authorities from 103 countries and regions of the world have joined CIPS.
Last year, more than 80 trillion yuan were transacted through CIPS, an increase of 75% from 2021. In January 2022, the yuan became the fourth major transaction currency in the world after the US dollar, the euro and the British pound.
It is important that the country’s central bank encourages the innovation of new and creative financial means, such as the digital yuan, and inspires major Internet platforms, including Tencent’s Wechat Pay and Ant Group’s Alipay, to expand innovation in this space.
To promote the internationalization of the yuan, China has entered into bilateral currency swap agreements with more than 40 countries, which have greatly facilitated the use of the yuan abroad. The country should continue to tirelessly expand the program, especially with major world countries and trading blocs such as the Middle East, ASEAN and BRICS countries.
Translation: SM
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