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Russia dumps US debt and hoards gold

January 11, 2019 15:25
source: BWC Chinese Network

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The US dollar has firmly occupied the world in the past few decades.currencyThe position of the king, the US economy also easily acquires the global material wealth by virtue of the dollar status, and passes on the risk of deficits of nearly one trillion US dollars by selling the US dollar core assets of the US debt to the whole world. However, the two major cycles of the US economy were based on the unilateral abolition of the Bretton Woods gold standard in the United States in 1971 and the absence of a non-US dollar currency.

This also means that once some monetary authorities around the world re-raise gold toforeign exchange reservesThe important position and inclusion of a broader non-US dollar currency reserve, the dollar's status as the king of the currency will also face a real decline. Today, such a sight is happening.

Take the Russian economy as an example. 2018 is a year in which Russia proposed a non-dollarized currency. The most direct performance is that Russia dumped a large amount of US dollar assets, significantly reduced the US dollar foreign exchange reserves, and increased the foreign exchange reserves of physical gold and multiple currencies.

According to the US Treasury's International Capital Flow Report TIC, Russia has not appeared in the list of major foreign holders of US debt for several months. From March to July 2018, the total number of US debts reduced by Russia was 81.193 billion US dollars, and the reduction ratio reached 84.49%. You know, Russia has been one of the top ten foreign creditors in the United States for a long time. According to RT1 reported on the 10th, the Russian central bank has further moved away from the dependence on the dollar, and cut the dollar's share of the country's foreign exchange reserves to the lowest level in history, converting about 100 billion US dollars into the euro, the yen and the yuan.

The report shows that the share of the US dollar in Russian foreign exchange reserves fell sharply in the short period of three months from March to June 2018, from 43.7% to a new low of 21.9%. At the same time, the funds drawn by the Russian central bank from the US dollar reserve were redistributed to increase the share of the euro to 32% and the share of the yuan to 14.7%.

It is worth mentioning that in the third quarter of 2017, Russia holds 1% of the renminbi, which means that Russia is suddenly increasing its holdings by 14 times. However, this may only be the beginning.AnalystIt is said that as the Sino-Russian trade volume exceeds the $100 billion mark and the future Sino-Russian trade and economic strength is further increased, the trend of Russia accelerating the hoarding of RMB assets will continue.

Things are far from over. Since the beginning of this century, Russia’s gold reserves have increased by more than 500%. As of December 2018, Russia’s gold reserves have increased to 2066.2 tons. Russia is co-locating physical gold with non-US dollar currencies such as the renminbi as an important strategic foreign exchange reserve for the country to hedge against the risk of the dollar. The World Gold Council said that Russia is the undisputed big buyer of the international gold market.

In addition, the Russian central bank confirmed a few weeks ago that Russia is still discussing with the BRICS countries such as China and India to establish a new world physical gold trading system, and will bypass the dollar monopoly of gold pricing power for many years. According to the Russian media "Russia Today", Russian Finance Minister Anton Siloulov has warned that if Russia's gold and foreign exchange reserves are checked, even if there is such an idea, it will be regarded as financial horror. Doctrine and declare war.

It is not difficult to see that the layout of the Russian economy in terms of foreign exchange reserves is doing enough homework to go deep into the dollar. It is worth noting that in the global economy and trade, Russia currently has a non-dollarized environment in the economic and trade sector, and also has non-US dollars in related fields with India, the United Arab Emirates, Iran, Turkey, and Venezuela. Currency trading. These signs are a big interpretation of the dollarization of the Russian economy. The Russian Federation has publicly stated that the financial restrictions of the US dollar have forced Russia to seek an alternative settlement currency for the US dollar to ensure the security of the country's economy. Obviously, Russia’s proposal for a non-dollarization and the aforementioned monetary initiatives are becoming a major trend in the global dollarization.

(Article source: BWC Chinese website)

                (Editor: DF134)

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