Moving away from the dollar

NO MORE DOLLAR! Russia, China And EU Exclude USD From International Payments

Paul Antonopoulos

RussFort,
5 July, 2019


MOSCOW – While an agreement on payments in national currencies was signed between Beijing and Moscow, Europe has launched a mechanism that allows trade with Iran to ignore US sanctions: all without the dollar.


In the opinion of Natalia Dembinskaya, this rejection of the American currency becomes more and more concrete.


Exactly one year ago, World Bank economists said that the process of de-dollarization in the world had begun and could no longer be stopped. Thus, since the end of 2014, the Russian-Chinese agreements on direct trade in rubles have entered into force without the participation of American, British or European Union banks.



SWIFT with Russian and Chinese analogues


In early June, Russian Finance Minister Anton Siluanov and China’s People’s Bank governor Yi Gang signed an agreement on the creation of a new payment system, which will become a “gateway to the foundation of Russian and Chinese analogue of SWIFT “- an international interbank financial data transmission system.


According to Dembinskaya, the payments system in national currencies is expected to be operational by the end of the year, covering first the largest Russian oil and gas companies as well as agricultural producers.


Due to the steady increase in the threat of economic sanctions by Washington, Moscow and Beijing are rushing to close such contracts.


Since approximately 42% of SWIFT transactions are made in dollars, this is a powerful weapon for Washington. The exclusion of the system threatens the Russian economy with serious problems – from capital flight to the fall of the ruble and the growth of interest rates on credit.



According to the Financial Times, the aggressiveness of Washington forces Russia and China to test the resistance of the American currency. The new payment mechanism will not only reliably protect against the pressure of sanctions but will also jeopardize the status of the dollar as the main reserve currency.



Bypassing sanctions


Despite the threat of sanctions by Washington, EU countries continue to buy Iranian oil and pay not in dollars, but in euros.


The Europeans want to circumvent the US restrictions with the help of the mechanism of financial transactions INSTEX ( Instrument in Support of Trade Exchanges), announced last week by the United Kingdom, France and Germany which allows the exchange of goods without money transfer between Iranian companies and the EU.


Since June 28 this mechanism is available to all EU countries and will soon be available to companies from other countries.


Experts believe that INSTEX will strike a blow on the US desire to take control of the world economic order as any country, other than EU members, that does not want to comply with the White House sanctions regime can get rid of the dollar.