Petrodollar Panic? China Signs Currency Swap Deal With Qatar & Canada
The march of global de-dollarization continues.
In the last few days, China has signed direct currency agreements with Canada becoming North America’s first offshore RMB hub, which CBC reports
(1) analysts suggest „could double maybe even triple the level of Canadian trade between Canada and China,“ impacting the need for Dollars.But that is not the week’s biggest Petrodollar precariousness news, as The Examiner reports,
a new chink in the petrodollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations
using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petro-dollar system. As Simon Black warns, „It’s happening… with increasing speed and frequency.“
Authorized by China’s central bank, the deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man – in most cases, the U.S. dollar.
Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.
„It’s something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there,“ said CBC’s Catherine Cullen, reporting from Beijing.
It’s happening. With increasing speed and frequency. (3)
The People’s Bank of China and the Canadian Prime Minister’s office issued a statement on Saturday stating that Canada will establish North America’s first offshore renminbi trading center in Toronto.
China and Canada agreed on a number of measures to increase the use of renminbi in trade, business, and investment. And they further signed a 200-billion renminbi bilateral currency swap agreement.
Moreover, just today, hot off the presses, the central banks of China and Malaysia announced the establishment of renminbi clearing arrangements in Kuala Lumpur, which will further increase the use of renminbi in South-East Asia.
This comes just two weeks after Asia’s leading financial center, Singapore, became a major renminbi hub, with direct convertibility established between the Singapore dollar and the renminbi.
And as Black notes, everyone is in on the trend. All across the world, the renminbi is quickly becoming THE currency for trade, investment, and even savings.
Renminbi deposits in South Korea, for example, surged 55-times in one single year. It’s stunning.
The government of UK just issued a renminbi bond, becoming the first foreign government to issue debt in renminbi.
Even the European Central bank is debating to include renminbi in its official reserves, while politicians the world over are sounding not-so-subtle warnings that a new non-dollar monetary system is needed. ….
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