As Moscow and Seoul throw their support behind China’s Asian Infrastructure Investment Bank, the question is no longer about the end of dollar hegemony but rather about the extent to which the new venture will be used to institute a global shift towards the yuan.
– De-Dollarization Continues As Russia Seeks AIIB Membership (ZeroHedge, March 28, 2015):
As we noted a week ago, Vladimir Putin’s calls for a Eurasian currency union clearly demonstrate that the Russian President is acutely aware of the fact that the unipolar world of the 1980s is long gone. Putin’s security council also made it clear this week that the Kremlin is well aware that the sole aim of US foreign policy is preserving Western hegemony via an implicit (and sometimes explicit) policy of containment aimed at perpetuating the idea of US exceptionalism. Moscow then took the rhetoric up a notch on Thursday, accusing the US of attempting to take the “mutual” out of “mutually assured destruction” (i.e. Moscow thinks Washington is trying to tip the nuclear power balance).
Given all of this, we weren’t surprised to learn that Putin is now backing a Russian bid for membership in China’s Asian Infrastructure Investment Bank (for a summary of AIIB developments, see here).
Here’s more via RT:
Russia decided to apply to join the China-led Asian Infrastructure Investment Bank (AIIB), the country’s Deputy Prime Minister Igor Shuvalov said on Saturday.
“I would like to inform you about the decision to participate in the AIIB,” which was made by Russian President Vladimir Putin, Shuvalov said at the Boao Forum for Asia.
Shuvalov added that Russia welcomes China’s Silk Road Economic Belt initiative and is happy about stepping up cooperation.
“We are delighted to be able to step up cooperation in the format of the Eurasian Economic Union (EEU) and China…the free movement of goods and capital within the EEU brings economies of Europe and Asia closer. This is intertwined with the Silk Road Economic Belt initiative, launched by the Chinese leadership,” he said.
This comes after yet another US ally threw its support behind the venture last week, as South Korea finally conceded that not joining really wasn’t an option if Seoul wanted to maintain its influence in the region. More color via Bloomberg:
South Korea “needs to play the active role it deserves in the international community that’s comparable to its economic status, and AIIB would be an important gateway to expand our financial and diplomatic arena,” the Sejong, South Korea-based ministry said Thursday. The country will officially become a founding member of the AIIB once other members agree, and when the national assembly approves, according to the e-mailed statement.
Asia’s fourth-largest economy joins key U.S. allies from the U.K. to Germany and France in supporting China’s bid to create a new institution funding infrastructure projects in Asia. Japan is yet to make a decision on membership after the U.S. expressed concerns about the fund’s governance structure.
And then there’s The Netherlands, an official bid from Australia, and Brazil…
Via Reuters:
Russia, Australia and the Netherlands on Saturday became the latest three countries to say they plan to join the China-led Asian Infrastructure Investment Bank (AIIB), adding clout to an institution seen as enhancing China’s regional and global influence.
The AIIB, seen as a challenge to existing institutions the World Bank and Asian Development Bank, has drawn a cool response from the United States, despite which European U.S. allies including Britain, France, Germany and Italy have already announced they would join the bank.
Other countries such as Turkey and South Korea have also said they would join. Brazil, China’s top trading partner, said on Friday it would sign up and that there were no conditions set. “Brazil is very interested in participating in this initiative,” the office of President Dilma Rousseff said in a statement.
To make a long story short, everyone but the US and Japan are on board and Japan is seriously considering a bid. The question now is not whether de-dollarization is progressing or whether a shift away from US-dominated multinational institutions is in the offing (that horse, as one ADB official put it, has left the barn), but rather whether China will be aggressive about using the AIIB to begin a push towards yuan hegemony. Of course Beijing is playing down the idea that it will use the new development bank as a means of advancing China’s global footprint, but as we noted on Thursday, actions speak louder than words.
I agree with everything the article says, it is inevitable……
But, I don’t see another world reserve currency because the advent of the electronic currency by Hugo Chavez has made the need for any national currency to be a world reserve currency obsolete.
One needs only look at the model set up by Chavez for his tiny South American Trade Alliance in Spring of 2010. Before this, 100% of all nations used the US dollar to complete international transactions. Chavez brought out the Sucre for use by the 12 members of the SATA that fateful Spring. For the first time, member nations could trade with each other using their own currencies, leaving the dollar out. The Sucre translated the value of each currency at the time of transaction, making the need for any world reserve currency unnecessary and obsolete.
Russia and China adopted an identical trade agreement with each other in November of 2010. China went on to recruit Turkey, Iran, India, Japan, Netherlands, Australia, New Zealand, Switzerland, Brazil and much of South America, most emerging African nations, along with South Africa, Qatar, and many other countries I cannot recall at the moment.
In short, in 2010, the US had 100% of all international trades completed in dollar. By January of 2015, the US has lost 67% of the world nations…..33% of nations (Mostly Euro zone members) still complete international trades with dollars.
One of the reasons the FED had to shut down the free money pipeline the greedy guts are whining about on Wall Street is that even the most corrupt bankers are finally realizing the dollar has papered the world, and that the debt level far exceeds the amount of money available in the world.
I just went to USdebtClock.org.
US national debt ( climbing faster than I can write it) $18,165,207, 100,900.00
18 Trillion.
Interest on the National Debt (the FED is paying most of it) $240,855,025,900.
240 Billion
US GDP is $18,760, 500, 760, 800.00
18 Trillion, our debt level now exceeds our GDP
US unfunded liabilities: $95,678,711,750,900.00
95 Trillion……
Currency and credit Derivatives:
$689,246,544,700,916.
689 Trillion…….
If we can see how lethal these numbers are, what must the greedy gut bankers be thinking?
Our government has done it to itself. From NAFTA to the current horror Obama is trying to fast track through congress….all of these laws send jobs and money overseas…..we have been gutted by our own leaders.
The de-dollarization has already become a reality.
Technology has rendered the old ways of trade obsolete, and it would have happened no matter what. It is far more convenient to trade using your own money than having to covert to some other currency to complete a trade.