"De-dollarization" accelerates! Many countries officially announced RMB settlement!
During the Nixon era, US Treasury Secretary Connery once boasted, "The US dollar is our currency, but it is your problem
Since the beginning of last year, many emerging market countries have faced the "plunder" of a strong US dollar, which has become the main source of instability and uncertainty in the world economy.
Nowadays, the global trend of "de dollarization" is accelerating, and over 10 countries have begun to challenge the US dollar's trade settlement status during this period.
Malaysian Prime Minister Anwar, who has just concluded his visit to China, stated in the country's parliament on April 4th that Malaysia has no reason to continue relying on the US dollar. Malaysia has proposed to China the idea of establishing an "Asian Monetary Fund", proposing that trade between the two countries can be settled in Ringgit and Chinese yuan, and China is also open to this proposal.
On March 29th local time, the Brazilian Ministry of Foreign Affairs quoted a statement from the Brazilian Trade and Investment Promotion Agency (ApexBrasil) announcing that Brazil has reached an agreement with China to no longer use the US dollar as the intermediate currency, but to settle trade in its local currency.
According to this agreement, foreign trade and financing business between Brazil and China can be conducted by converting the real into Chinese yuan, and vice versa, thereby avoiding the situation of converting the real into US dollars in transactions.
In the eyes of industry insiders, this means that the memorandum of cooperation on RMB clearing arrangements signed between the People's Bank of China and the Brazilian Central Bank in early February has officially come into effect. The Brazilian Central Bank announced on March 31st that the Chinese yuan has surpassed the euro as the country's second largest international reserve currency.
Several banking professionals pointed out that the biggest beneficiaries of cross-border trade and investment settlement in local currency between China and Pakistan are the enterprises of both countries. At present, most of the trade and investment settlement currencies of China and Pakistan are still US dollars, which makes both sides face two major problems. First, all US dollar settlements need to go through CHIPS (clearing house in New York), resulting in high transfer costs; The second is the exchange rate risk brought about by the two exchanges.
The Central Bank of Iraq recently announced the latest measures to improve foreign exchange reserves, including allowing direct settlement of the country's trade with China in RMB.
On February 22nd, the Iraqi Central Bank issued a statement stating that direct settlement of trade with China in RMB will be achieved through two channels: firstly, increasing RMB reserves through RMB accounts opened by the country's banks in Chinese banks; The second is to increase the country's bank's US dollar reserves through the accounts of the Bank of Iran at JPMorgan Chase and DBS Bank in Singapore, which can be used to exchange for RMB.
Iraqi government economic advisor Mudir Saleh told the media that this will be the first time Iraq has allowed import trade from China to be settled in RMB, after the country's trade with China has been settled in US dollars. And China is Iraq's largest trading partner.
The Export-Import Bank of China and the National Bank of Saudi Arabia successfully completed their first RMB loan cooperation in March, and the loan funds will prioritize meeting the funding needs under the China Saudi Arabian trade. This business is the first cooperation between China Exim Bank and Saudi financial institutions.
Why should this wealthy country apply for a RMB loan? The main reason is that the Chinese yuan is currently relatively cheaper than the US dollar, and there is no exchange rate risk when purchasing Chinese goods using the yuan, making trade more convenient.
President of Iran Leahy, who visited China in February, also discussed with China about increasing the share of local currency settlement. According to the latest data from the Iranian Financial Forum, as of December last year, the share of RMB in Iran's foreign reserves has exceeded 22%. Iranian Economy Minister Handuqi stated that the Chinese yuan has already accounted for a significant proportion of trade between China and Iran.
On January 18th, the Russian Foreign Minister stated that about half of the trade volume between Russia and China is settled in the local currencies of both countries, and this proportion is rapidly increasing. According to the website of Singapore's Lianhe Zaobao on April 4, one year after Russia was sanctioned by the West, the RMB has replaced the US dollar as the largest foreign currency in Russia's trading volume.
According to data compiled by the daily trading report of the Moscow Stock Exchange, the trading volume of the Chinese yuan exceeded that of the US dollar for the first time in February, and the difference between the two became more apparent in March. It was reported that before the Russia-Ukraine conflict, the trading volume of RMB in the Russian market was negligible.
On March 29th, China settled cross-border purchases of imported liquefied natural gas (LNG) in RMB for the first time. The transaction was reached by CNOOC and Total Group of France at the center of the Shanghai Oil and Gas Exchange.
This marks a substantive step forward in China's exploration of cross-border RMB settlement transactions in the field of oil and gas trade, and also signifies a significant acceleration of the internationalization process of the RMB.
RMB settlement has become popular.
According to data released by the Bank for International Settlements (BIS), the US dollar remains the largest currency in global transactions, and its dominant position has not been affected yet. However, the trading proportion of the Chinese yuan has significantly increased in recent years.
In 2022, the proportion of RMB trading volume increased from 4% in 2019 to 7%, becoming the world's fifth largest trading currency after the US dollar, euro, Japanese yen, and British pound.
The People's Bank of China has authorized 31 RMB clearing banks in 29 countries and regions, and has signed bilateral currency swap agreements with central banks or monetary authorities in 40 countries and regions, with a total amount of over 4 trillion yuan.
When foreign traders receive orders, they may ask the buyer if it is possible to pay in cross-border RMB?