In just the past 30 days we have seen three major economies open up their bond markets to allow the sale of Chinese Yuan denominated debt instruments. And on Nov. 6 we can now add a 4th country to this list as Russia announced their will begin selling RMB denominated bonds in their own markets beginning in 2016.
Russia already has several trade agreements with China that allow for direct bi-lateral trade in each other’s currencies, and as the largest energy producer in the world, this new move will have massive consequences for the petro-dollar as the growing internationalization of the RMB will lead more and more nations to bypass the global reserve in favor of direct energy purchases using the Yuan.
Federal loan bonds denominated in Chinese yuan will be issued on the Moscow Exchange in 2016, the director of the debt department of the Russian Finance Ministry Konstantin Vyshkovsky said Friday.
The $1 billion is only the minimum amount, according to the ministry. Other details such as the repayment period and the interest rate will be determined immediately before the issue in accordance with the preferences of potential investors, said Vyshkovsky. – Russia Today
What is perhaps even more interesting with Russia that is not prevalent with either Britain, Germany, or South Korea is the fact that the Eurasian power primarily intends to sell its own sovereign bonds using the Yuan instead of the Ruble, and allow its future debt creation to be in a stronger currency that is outside the parameters of ongoing U.S. sanctions. In addition, it will also increase the number of foreigners investing in their debt, which is something that occurred sporadically when it was denominated in Rubles.
The internationalization of the Yuan is moving forward at incredible speeds, and rushing headlong towards a confrontational showdown with the dollar for global supremacy. And with China bringing their SWIFT alternative online (CIPS), having built competitors to the IMF and World Bank (AIIB and BRICS Bank), and planning the eventual declaration of a new gold pricing mechanism, it may not be too long before the rest of the global economies are open to forcing an end the era of dollar hegemony, and create a new financial paradigm with a new primary currency at its head.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.