While it is unlikely for the time being that the US dollar and the euro will lose their dominant position among international currencies, current data point to one thing, according to European Central Bank Governor Christine Lagarde: “The status as international currencies should not are no longer taken for granted.”
Attention should also be paid to the currency in which trading transactions are organized, she added. This is especially true for oil. Some countries are planning to increasingly use alternatives to traditional currencies, such as the Chinese renminbi or the Indian rupee, in international trade, Lagarde said Monday at an event in New York. There is also increasing accumulation of gold as an alternative reserve, possibly driven by countries geopolitically more closely linked to Russia or China, the speech said.
In this context, Lagarde also referred to efforts to create alternatives to the global banking communications system SWIFT. “Since 2014, Russia has created such a system for domestic and cross-border use.” Last year, some 50 banks in a dozen countries used it. “And since 2015, China has set up its own system to process renminbi payments,” she added.
First renminbi LNG transaction
The sanctions against Russia may even fuel these developments. Because Moscow increasingly relies on the Chinese national currency to make energy deals. Incidentally, the first purchase of liquefied gas between a Chinese and a French energy company in Renminbi was completed a few weeks ago. The natural gas came from the United Arab Emirates and was resold.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
