China and Russia want to trade in their own currencies

China and Russia want to use their own currencies more often in international trade. The two countries are expected to sign an agreement this week to allow trade between the two countries in Chinese yuan and Russian rubles To be settled. Companies can choose which currency they want to use and which payment system the transaction will go through.

The volume of trade between the two countries increased by 27% last year to a record $107 billion. In future, these transactions will no longer have to be settled in dollars, but in the national currencies of both countries. In this way, China and Russia are trying to become less dependent on the American banking system, which processes payments in dollars. The agreement states that both countries will actively promote the use of their own currencies, both for international trade and investment. The two countries also want to better align their payment systems so that transactions can be carried out faster.

'Role of the dollar needs to be reviewed'

The plan to charge more international trade in currencies other than the dollar is not new. However, we do see that China and Russia are increasingly rushing to switch to trade in rubles and yuan. After all, both countries are confronted with a hostile attitude from the United States, which is trying to impose its will on other countries with sanctions and import duties. As long as both countries use dollars in international payments, they remain vulnerable to new sanctions.

Russian President Vladimir Putin said in his speech to the St. Petersburg Economic Forum today that the role of the dollar should be revise. In the presence of Chinese President Xi Jinping, he said that the dollar is increasingly being used as a means of political pressure. In doing so, the United States is undermining the advantageous position it gained with the Bretton Woods system, according to the Russian president.

"Changes in the global economy require adjustments from international financial organizations and a reconsideration of the role of the dollar, which acts as a means of pressure on the rest of the world."

At the end of last year, Russia's Minister of Economic Development said Russia should switch to the euro for trade with European countries. He noted that many international payments are still settled in dollars, while the euro could also be used to do so. Last year, the Russian central bank also exchanged dollar reserves for euros and yuan.

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