Communist China and Russia have partnered on many agendas that will weaken their foes, and now they plot for the biggest takeover: replacing the United States Dollar. Both Chinese Communist Party leader Xi Jinping and Russian President Vladimir Putin “called for payment alternatives to decrease the U.S. dollar’s dominance in international trade and to reduce U.S. control of the SWIFT system” reports The Foreign Desk.
The BRICS – an acronym for Brazil, Russia, India, China, and South Africa – held a summit on June 23 chaired by Chinese leader Xi. In his opening remarks, Xi stated, “We should also expand BRICS cooperation on cross-border payment and credit rating to facilitate trade, investment, and financing among our countries.”
Xi also reaffirmed the Chinese Communist Party’s (CCP) commitment to working together with the BRICS nations to achieve the CCP dream of the Global Development Initiative (GDI).
Chinese Foreign Minister Wang Yi presented the GDI to the United Nations in April 2022 as a CCP-led global development initiative. It was welcomed by the U.N. and has received messages of support from 100 nations. The Group of Friends of the GNI was established on the U.N. platform. So far, more than 50 countries have joined.
Chinese state-run tabloid Global Times alleged that bankers and economists in BRICS countries have recommended that the bloc “expand national currency settlements and lending to counter the US’ weaponization of the dollar.”
Similarly, the Russian news agency TASS reported on June 22 that in Putin’s address at the BRICS forum, he called for developing an international reserve currency based on a basket of currencies.
Sergey Storchak, chief banker of Russian bank VEB.RF, told Global Times on June 21, “The BRICS and other interested nations need to talk about setting up their own independent global financial system – whether it would be based on the Chinese currency or they will agree on something different.” VERB.RF is one of the sanctioned entities that has been excluded from the U.S. SWIFT international payment system.
Xi, Putin, and the bankers from VEB.RF have three basic complaints regarding currency. They resent the dominance of the U.S. dollar as a reserve currency. They do not want the dollar to be the currency of international settlement. And they are threatened by the necessity to transact international payments through the U.S. SWIFT system, which depends on U.S. banks.
The reason why countries use the U.S. dollar in the international settlement is because commodities such as oil are priced in dollars, and because the dollar is a stable currency that is readily convertible everywhere in the world. None of the BRICS currencies are considered fully convertible. The Chinese yuan is a reserve drawing rights (SDR) currency of the International Monetary Fund (IMF), officially making it an international currency, but even the yuan has limited convertibility.
Central banks around the world hold U.S. dollars as a major part of their foreign currency reserves not only due to the stability and convertibility of the dollar, but also because of its usefulness in settling international trade.