24 July 2024
Russia and China seek to `overcome` the USD 0

Russia and China seek to `overcome` the USD 0

(Dan Tri) - By creating its own currency and financial system, the Russian-backed economic and trade alliance wants to reduce dependence on the USD and Euro for internal trade activities and with China.

(Dan Tri) – By creating its own currency and financial system, the Russian-backed economic and trade alliance wants to reduce dependence on the USD and Euro for internal trade activities and with China.

Russia and China are looking to reduce their dependence on the USD (Illustration: Reuters)

The Eurasian Economic Union (EAEU) – a partnership with the European Union (EU) – is a group of five member countries including Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.

The EAEU is also promoting closer relations with China – which is expanding its influence in the Eurasian continent through the `One Belt, One Road` initiative.

Minister of Integration and Macroeconomics of the Eurasian Economic Commission Sergei Glazyev said earlier this week that the EAEU is increasing the use of national currencies in trade transactions to minimize risks.

“Russia and China have been creating their own payment systems and an electronic information exchange system between banks, but the economic activity of member countries still uses these systems less actively.

“I believe we should reverse the situation and create our own currency and system.

Currently about half of payments in the EAEU are made in national currencies, while the proportion of transactions with China is about 15%.

Mr. Glazyev also emphasized the urgent need to stabilize the exchange rates of the local currencies of the bloc countries, establish Eurasian exchange and pricing mechanisms, and provide incentives

The above proposal was made in the context that Russia and China are looking for ways to reduce their dependence on the USD.

In 2014, the US used its control over the global financial system to punish Russia.

Beijing is also currently seeking to accelerate the internationalization of the Yuan in global payments to reduce `vulnerability` in the confrontation with the US.

In the first quarter of this year, only 46% of bilateral trade transactions between Russia and China used the USD – the first time in history this ratio was below 50%.

In addition to trade, Russia and China also strengthened financial cooperation to accelerate the de-dollarization process.

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