As part of talks that Russian President Vladimir Putin and Chinese President Xi Jinping are currently conducting in Russia, Russia has pledged to use the Chinese yuan as a settlement currency with countries in Asia, Africa and Latin America. . Putin said that the use of national currencies for international trade “should be further encouraged.”
Russia expresses its support for the use of the Chinese yuan in international agreements
President Vladimir Putin of Russia has made statements supporting the replacement of the US dollar as the settlement currency for the settlement of international payments. As part of Chinese President Xi Jinping’s visit to Russia, Putin expressed his positive opinion on the use of the Chinese yuan as a form of payment in bilateral trade, especially with emerging economies.
Quoted by the Tass news agency, Putin fixed:
We support the use of the Chinese yuan in payments between Russia and countries in Asia, Africa and Latin America.
Currently, two thirds of trade between Russia and China is managed using national currencies and, according to Putin, this should be further developed, with a deeper level of integration between banking and market institutions in both countries.
get away from the dollar
Russia is part of a global group of countries that are trying to move away from the US dollar as part of their bilateral and multilateral payment agreements. In August, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) released data showing Russia was the third largest market using yuan for global payments. Also, at that time, the Chinese yuan ranked fifth among the most used currencies for these settlements.
However, according to analysts, these figures could rise due to the new global configuration that the current Russia-Ukraine conflict is causing in economic markets. Dong Dengxin, director of the Institute of Finance and Securities at Wuhan University, stated:
If the sanctions on Russia continue, participation will continue to increase in its use.
However, others believe that this reliance on the Chinese yuan could be detrimental to Russia in the long run. Carnegie Endowment for International Peace analyst Alexandra Propopenko wrote:
Russia is trading its dependency on the dollar for a dependency on the yuan. If relations with China deteriorate, Russia may face reserve losses and payment interruptions.
Other groups have their own plans to move away from the dollar. The BRICS nations, Russia being one of them, are currently working to issue their own reserve currency. In January, Brazil and Argentina also made announcements about the creation of a common Latin American currency to be used for settlement.
What do you think about Russia’s use of the Chinese yuan for international agreements? Tell us in the comment section below.
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