Last summer, the Chinese government launched a pilot program for a digital version of the yuan. The virtual currency ups the ante in the war on cash and creates the potential for the government to track and even control consumer spending.
Last week, the digital yuan got a boost when China’s biggest online retailer announced it has developed the first virtual platform to accept the Chinese digital currency.
The Chinese government has launched a pilot program for a digital version of the yuan. The virtual currency ups the ante in the war on cash and creates the potential for the government to track and even control consumer spending. It also raises some concern that the Chinese could threaten dollar-dominance.
The percentage of US dollars held as currency reserves globally dropped to the lowest level in nearly six years in the second quarter of 2019 according to the latest IMF data. Meanwhile, Chinese yuan made up the biggest percentage of reserves ever.
The dollar’s shrinking share of global reserves comes as countries like Russia and China move toward de-dollarization in an effort to undermine the ability of the US to weaponize the dollar as a foreign policy tool. The global gold rush on the part of central banks is part of this movement.
Several currencies have been strong against the dollar over the last couple of days, but as Peter Schiff said in his podcast, the biggest gainer wasn’t a currency at all. It was real money – gold.
Gold hit six-year highs on Monday and set records in a number of currencies. It continued to move upward on Tuesday. Overnight, the yellow metal pushed briefly above $1,500.
Investment guru Jim Rogers recently told RT that the dollar is just a few short years away from losing its global dominance.
In the next few years, the American dollar is going to lose its position as the world’s reserve currency and the world’s medium of exchange.”
Late last month, China finally launched its much anticipated yuan-denominated oil futures contract. Many analysts think this is yet another sign that the mighty dollar’s world dominance is coming to an end.
Turkey went on a gold-buying spree in 2017 and that trend continued in the first two months of 2018. Turkish President Recep Tayyip Erdoğan likes gold and it’s pretty clear the president has been pushing Turkey’s central bank to buy gold and reduce foreign currency reserves in an effort to move away from dependence on the dollar and euro.
On April 16, Erdoğan got a little more overt in his apparent quest to dethrone the dollar, suggesting international loans should be made in gold instead of greenbacks in order to prevent exchange rate pressure on economies.
The United States uses the dollar as a weapon to keep other countries in line, but it’s becoming a less and less effective strategy as other nations find ways to minimize their dependence on the greenback.
Pakistan serves as the latest example. Just one day after Pres. Trump blasted the country on Twitter, Pakistan’s central bank announced it was abandoning the dollar and replacing it with the yuan for bilateral trade with China. This is yet another sign of global de-dollarization.
China wants to dethrone the dollar and it could take a step in that direction before the end of the year.
According to numerous reports, China is prepared to launch a yuan-denominated oil futures contract before Christmas. Last week, the Shanghai International Energy Exchange successfully completed a fifth round of yuan-backed oil futures testing. According to a report by RT, the organization has met all the listing requirements and is set for an official launch.
Last month, the Nikkei Asian Review reported on a move by China that could take a first step toward dethroning the US dollar. The proposed launch of a gold-backed, yuan-denominated oil futures contract got a lot of attention in alt-media circles, but didn’t make much of a splash in the mainstream. But now the mainstream is sitting up and taking notice.
During an interview with Bloomberg TV Tuesday, Graticule Asset Management Asia CEO Adam Levinson said China rolling out a yuan-denominated oil contract within the next few months will be “a wake-up call” for investors who haven’t paid attention to the plans.
The move potentially creates a way for oil exporters to circumvent US dollar-denominated benchmarks by trading in yuan. The contracts will reportedly be priced in yuan, but convertible to gold.