China's
Launch of 'Etro-yuan' Sounds Death Knell for
Dollar's Dominance
By RT
October
25, 2017 "Information
Clearing House"
- One of the world’s top energy importers,
China, is set to roll out a yuan-denominated oil
contract as early as this year. Analysts call
the plan, announced by Beijing in September, a
huge move against the dollar's global dominance.
The
so-called petro-yuan is a “wake up call”
for investors who haven’t paid attention to the
Chinese plans, according to the head of
Graticule Asset Management Asia Adam Levinson,
as quoted by Bloomberg.
Earlier
this year, the Chinese government announced
plans to start a crude oil futures contract
priced in yuan and convertible into gold. The
contract will enable the country's trading
partners to pay with gold or to convert yuan
into gold without the necessity to keep money in
Chinese assets or turn it into US dollars.
The new
benchmark will reportedly allow exporters, such
as Russia, Iran or Venezuela to avoid US
sanctions by trading oil in yuan.
The
analyst said the new contract would be able to
serve as a hedging tool for Chinese
corporations, as well as support the
government’s broader plans to extend the use of
the national currency in trade settlement.
According to Levinson, Chinese companies might
grow into anchor investors in Saudi Arabia’s
initial public offering of its national oil
giant, Saudi Aramco.
At the
same time, some analysts are skeptical of
China’s ambitious plan to create its own
benchmark.
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“Game changer it is not — at
least not yet. But it is another indicator of
the beginning of the glacial, and I emphasize
the word glacial, decline of the dollar,”
said Gal Luft, co-director of the Institute for
the Analysis of Global Security, as quoted by
CNBC.
The end
of US dollar hegemony has been a consistent
message from Russian President Vladimir Putin.
“Russia shares the BRICS
countries’ concerns over the unfairness of the
global financial and economic architecture,
which does not give due regard to the growing
weight of the emerging economies. We are ready
to work together with our partners to promote
international financial regulatory reforms and
to overcome the excessive domination of the
limited number of reserve currencies,”
Putin said two months ago during the BRICs
summit in Xiamen
