China Urges International Community to Find Alternatives to ‘Weaponized’ US Dollar by Schiff Gold.
In an opinion piece published yesterday, a Chinese government newspaper called for the international community to find alternatives to the global dollar system and warned “capricious actions” by the United States government could “ruin the future of the dollar itself.”
This is yet another sign that the world is getting tired of the US weaponizing the dollar.
We’ve been reporting on efforts by countries like Russia and China to minimize their exposure to the dollar, and we’ve speculated that ultimately these countries would like to dethrone the greenback from its perch as the world’s reserve currency. The Global Times article is interesting because it puts these goals in stark, unambiguous terms.
The Global Times focused on tensions between the US and Iran, and the economic sanctions imposed by the Trump administration. It called on “all parties concerned” to “negotiate and declare a dollar replacement strategy so as to minimize the negative effects brought about by Washington’s capricious acts and peacefully resolve the Iran nuclear issue.”
It’s easy to shrug off calls for a dollar replacement by countries like China. After all, the US and China are in the midst of a trade war and have had a rocky relationship for several years. But traditional American allies have also grown weary of the US using the dollar as leverage and they have also started taking steps to undermine dollar-dominance. As we reported last week, a European payment system set up to circumvent US sanctions on Iran will be ready soon.
The new payment system called INSTEX (Instrument in Support of Trade Exchanges) will allow France, Britain and Germany, along with other EU nations, to continue trade with Iran outside of the dollar-based SWIFT payment system.
This is exactly the kind of first step the Chinese want to see. And it’s clear from the Global Times piece that the Chinese see INSTEX as a first step. They are using the Iran crisis as a way to urge the world to further erode US dollar-power.
The fact that the global system facilitating financial transactions uses the dollar gives the US a great deal of economic and geopolitical leverage. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) enables financial institutions to send and receive information about financial transactions in a secure, standardized environment. Since the dollar is the world reserve currency, SWIFT facilitates the international dollar system.
Nobody likes a bully and it’s clear that the Chinese want to cast the US in that light. The Global Times accuses the US of sabotaging the international order, saying, “It is essential for countries to act together against unilateral US sanctions and long-arm jurisdiction.”
Perhaps it is time for international society to negotiate and think how to deal with US unilateralism and hegemony, and how to make it more reasonable and fairer through reform and adjustment. Thus, the international system can operate normally instead of being kidnapped by the US.”
As we’ve been reporting, central banks have gone on a gold-buying spree. So far in 2019, central banks globally have added 207 tons of gold to their reserves. This continues a trend we saw through 2018. In total, the world’s central banks accumulated 651.5 tons of gold last year. The World Gold Council noted that 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second highest annual total on record.
During an interview on RT Boom Bust, Peter Schiff called it a “global gold rush on the part of central banks” in preparation for a dollar crisis.
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