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Bitcoin Foundation President Brock Pierce discusses the cryptocurrency market, its influence on politics, and a market review in “Cavuto: Coast to Coast. “
China and Russia would possibly be operating with a new gold-backed currency for the purpose of dethroning the dollar as the world’s main reserve currency, but such a currency would not achieve that purpose.
“The USD remains the safest, most convenient and widely used currency in Asia and the world today,” Min-Hua Chiang, a researcher and economist at the Heritage Foundation’s Center for Asian Studies, told FOX Business. “No other currency (backed through gold or otherwise) is comparable, and this will be replaced in the near future. “
Neither country has officially shown its plans for such a currency, but China earlier this year began buying massive amounts of gold just as Russia was forced to abandon the dollar due to sanctions in reaction to the invasion of Ukraine. The war also led to the biggest cut in gold costs in years.
Some experts warn that those moves, along with the closer dating that evolved between Moscow and Beijing when the rest of the world moved away from Russia after the invasion, imply the possibility that China will try to launch a new currency with gold to back it.
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The concept of a non-unusual Russian-Chinese currency has periodically resurfaced over the past decade, especially after the Russian Central Bank opened its first office in Beijing in 2017.
Russian President Vladimir Putin (left) and his Chinese counterpart, Xi Jinping, are planning a meeting. (Alexei DruzhininTASS via Getty Images/Getty Images)
Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, noted that China’s leaders have been talking for two decades about reforming the global monetary formula and weakening the dollar’s dominance.
“Two elements of this strategy focus on the progression of a global formula of commodity trading in the yuan and the efforts of China, in partnership with Russia and other like-minded countries, to challenge the dollar’s dominance by creating a new reserve currency. “Singleton told Fox. Digital News.
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“In essence, Beijing and Moscow seek to build their own sphere of influence and financial unity within that sphere, thus protecting themselves from the risk of US sanctions,” he added.
But the record amount of gold China bought surprised some, even if the trend remains under the radar of the mainstream media: Swiss gold exports to China hit a five-year high, with Beijing receiving 80. 1 tons of gold valued at around $4. 6 billion, more than double the 32. 5 tons purchased in June and the second monthly total. at the highest since 2012, according to Reuters.
Inflation stimulates demand for gold. REUTERS/Mike Segar (US) (REUTERS/Mike Segar (US)/Reuters Photos)
International monetary statistics for March 2022 indicated that China could have the seventh-largest amount of gold reserves, with more appearing every month.
Francis Hunt, an industry expert, told Asia Markets that using gold to back the currency would be the most productive way to increase confidence in the currency, and that the currency could be virtual in nature to give China greater activity from its citizens.
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But Chiang downplayed the potential good fortune of a new coin because “relatively low trading volume” would restrict its growth, and that a virtual currency would prove difficult to promote.
“Even if the two countries use a new currency for bilateral trade transactions, the relatively low trade volume between them will restrict the effect on the U. S. dollar,” Chiang argued, noting that a multinational currency, such as the euro, demands for “a point of economic policy and coordination and integration that is not provided in Asia today. “
“The call will be limited,” Chiang said. Consider that as of August 2022, 43% of global invoices were made in USD, followed by 34% in euros. RMB accounted for 2% of overall global invoices according to RMB Tracker.
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“The renminbi is gaining ground, but it remains far from the dollar and the euro,” he concluded, adding that “foreigners’ confidence in China and Russia’s economic customers (or lack thereof) is a key constraint” to any unusual non-currency prospects.
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