Home » Economists Discuss Russia, China Potentially Developing Gold-Backed Currency That Could Undermine US Dollar – Economics Bitcoin News

Economists Discuss Russia, China Potentially Developing Gold-Backed Currency That Could Undermine US Dollar – Economics Bitcoin News

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Economists are complicit in reports that China and Russia may be developing new gold-backed currencies that could undermine the US dollar’s status as the world’s leading reserve currency.

Russia and China may be developing gold-backed currencies

Several experts share the view that Russia and China could create a new gold-burning currency, Fox Business reported Saturday, while China is buying up a ton of gold. emphasized that Russia is forced to leave the US dollar due to sanctions imposed on the country. After the invasion of Ukraine.

The move, along with closer ties that have developed between Moscow and Beijing, could indicate China is about to launch a gold-backed currency, according to some experts, according to news outlets. However, neither Russia nor China have officially confirmed their plans for such a currency.

For two decades, Chinese leaders have been talking about reforming the global financial system and reducing the dominance of the US dollar, said Craig Singleton, senior fellow at the Foundation for Defense of Democracies and former US diplomat. .

“Two elements of that strategy are developing a yuan-based global commodity trading system and working with Russia and other like-minded nations to challenge the dominance of the dollar by creating a new reserve currency. It’s centered around China’s efforts,” he told Fox. News Digital, details:

In essence, Beijing and Moscow seek to build their own spheres of influence and monetary units within them, effectively shielding themselves from the threat of US sanctions.

Swiss gold exports to China in July reached their highest level since December 2016. In the same month, Switzerland exported 80.1 tonnes of gold worth 4.4 billion Swiss francs ($4.4 billion) to mainland China, according to Swiss Customs data.

Min-Hua Chiang, a research fellow and economist at the Heritage Foundation’s Center for Asian Studies, believes that low trade volumes will “limit” the appeal of the new Russian-Chinese currency, stating: .

Even if the two countries used the new currency for bilateral trade transactions, the impact on the US dollar would be limited due to the relatively low volume of trade.

According to data from the Society for World Interbank Financial Telecommunications (SWIFT), a global financial messaging company, 42.6% of global payments in August were in US dollars, 34% in euros and 2.3% in Chinese yuan.

An economist at the Heritage Foundation stressed that the renminbi “still lags far behind the US dollar and the euro” and that a multinational currency like the euro has “a level of political and economic impact that does not exist in Asia today.” “Coordination and integration” is needed, he added. She gave her opinion:

The US dollar is still the safest, most convenient, and most widely used currency in Asia and the world today. No other currency (gold or otherwise backed) is comparable and that is unlikely to change in the near future.

At the BRICS summit in July, Russian President Vladimir Putin said that the BRICS nationsnew world reserve currency” The BRICS countries are Russia, China, India, Brazil and South Africa. Analysts believe the BRICS move to create a reserve currency is an attempt to undermine the US dollar and the International Monetary Fund’s (IMF) Special Drawing Rights (SDR).

Do you think Russia and China are developing gold-backed currencies that could undermine the US dollar’s status as the world’s reserve currency? Let us know in the comments section below.

Kevin Helms

An Austrian economics student, Kevin has been an evangelist since he discovered Bitcoin in 2011. His interests lie in Bitcoin security, open source systems, network effects, and the intersection of economics and cryptography.

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