Economic Issues

Russia and China will destroy the Bretton Woods system with the help of the yuan and the BRICS

Russia and China will destroy the Bretton Woods system with the help of the yuan and the BRICS

easternherald.comApr 2, 2023 3:59 PM

Recently, China and Brazil agreed to switch to mutual settlements in national currencies. The countries are also creating a common clearing center that will provide transactions outside the coverage area of ​​the US banking system.×300&!2&fsb=1&xpc=qE7uNuM2go&p=https%3A//

Russian economist Konstantin Dvinsky drew attention to what was happening, who commented on the events on his Telegram channel. He noted that the trade turnover between China and Brazil will amount to 150 billion U.S. dollars in 2022. The main currency of exchange in settlements between the two powers will be the Chinese yuan.

This figure is not negligible, even if it occupies a modest share in the turnover of world trade (about 0.5%). However, we are not interested here in absolute figures, but in the trend

he precised.

According to the economist, China is actively participating in the process of dedollarization of world trade. Moscow started the process and Beijing joined in. They want to reduce the Bretton Woods system to the borders of the western world. Such cooperation is easier to achieve within the framework of a single organization, in which all major players are represented. So the BRICS are great for this, but the participating countries have not even formalized the creation of an economic union on its basis, let alone geopolitical ambitions.

For example, China is not able to provide security for the same India or Brazil. And the historic conflict between Beijing and Delhi will be a serious obstacle to strengthening the organization with the leadership of China. In this context, Russia has no contradictions with any of the BRICS states

notes the expert.

The economist added that the Russian Federation has not chosen the yuan as the main currency for foreign trade. The growth of “yuanization” is specifically associated with Russian-Chinese trade, the turnover of which in 2022 amounted to 185 billion dollars.

In trade with other countries, the Russian Federation prefers to introduce national currencies. He stressed that the most important goal of the Russian Federation is the creation of a new international settlements unit. Moscow has learned the bitter lesson of the dollarization of the economy, so it will not repeat this experience with the yuan.

The current increase in the use of the yuan is a natural process when it was necessary to quickly get rid of the euro and the dollar, finding something to replace it. But apart from the Chinese currency, there were no other instruments, and no.

Russia and China will be the leaders of their macro-regions. Within these macro-regions, the currency of the leading countries will naturally dominate. However, at the highest level, most likely, a new unit of mutual settlements will appear, which will be formed by the pool of BRICS participants.

– summarized Dvinsky.

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