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The Defunt Dollar System

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Settlements in yuan between China and Russia have increased ninefold in annual terms between January and September 2014, says the Chinese Ministry of Economic Development.

“The settlement in national currencies between China and Russia in bilateral trade amounted to about 2 percent in 2013. There has been a significant growth in 2014. In particular, the use of the yuan in mutual settlements increased nine times in the first nine months of 2014.” TASS quotes Lin Zhi, head of the Europe and Central Asia Department of the Chinese Ministry of Economic Development.

“About 100 Russian commercial banks are now opening corresponding accounts for settlements in yuan. The list of commercial banks where ordinary depositors can open an account in yuan is also growing.” the official said.

Now Brazil and Uruguay have switched to settling bilateral trade with local currency to stimulate turnover, bypassing the US dollar. Payments in the Brazilian real and Uruguayan peso started on Monday. The agreement was signed on November 2 by the head of Brazilian Central Bank Alexandro Tombini and his Uruguayan counterpart Alberto Grana. Both countries believe such a move would strengthen trade across Latin America.

“The agreement was the result of long negotiations between the countries belonging to Mercosur [the common market of South American countries – Ed.], as well as the global strategies of BRICS,” RIA quotes Carlos Francisco Teixeira da Silva, Professor of International Relations at the Federal University of Rio de Janeiro.

Silva says the measure is a “step forward” in Latin American monetary independence, and “the best opportunity for the countries of South America to get rid of the old mechanisms of economic regulations dictated by the United States.”

If the new mechanism proves to be successful, it can be further expanded to countries such as Paraguay, Bolivia, or Venezuela.