Since the United States currently controls the de facto global reserve currency for now because of its agreements with the Middle East to have oil sales done only in dollars, it is very interesting to see a Western bank suddenly rush to become the first nation to facilitate the portability of another major currency that is quickly accelerating in strength to both threaten, and perhaps overtake the dollar in recognized international trade. And on Sept. 12, the British Chancellor of the Exchequer announced that they were going to be the first nation outside of China to issue a bond denominated in Yuan, and open the door for other nations, especially those within the EU, to break away from dollar hegemony and start the Chinese currency on the path of one day usurping the dollar as the primary global reserve currency.
And with Russia already in the process of selling its oil to nations in both the Rouble and the Yuan, the foundation of the petro-dollar may soon be eradicated as well, leaving the U.S. without a reason to remain the caretaker of the staple for international trade.
British Chancellor of the Exchequer George Osborne announced Friday that the British government intend to issue a Renminbi denominated bond and to use the proceeds to finance the government’s reserves of foreign currency.
“I can now announce that the UK government intend to be the first national government outside of China to issue a bond in China’s currency. We issued bonds in U.S. dollar before, now we will be issuing a bond in RMB,” said Osborne in the press release of the Sixth China-UK Economic and Financial Dialogue (EFD).
Chinese Vice Premier Ma Kai and Osborne concluded the meeting of the Sixth China-UK Economic and Financial Dialogue in London.
Osborne described this dialogue outcome as “a historic moment” and a statement of British confidence in the potential of the RMB to become “the main global reserves currency”. – Xinhuanet
Despite the close and long-standing ties Britain has with the United States, and especially with the 70 year old Bretton Woods agreement, the City of London is finding itself on the outside of a global paradigm change where the center of international banking and finance is quickly being usurped by Frankfort because of Germany’s close ties with Russia.
China will very soon bypass the United States and become the world’s largest economy, and with their close ties to the world’s largest energy nation (Russia), and consumer base (BRICS), it is only a matter of time before a large portion of the world systematically rejects the dollar and seeks stability in a much different type of financial construct. And since the BRICS nations have already begun the creation of alternatives to the World Bank, IMF, and now, SWIFT system, countries such as Britain are facing a hard choice of either remaining steadfast with the old regime, or deciding to get out in front of the new paradigm and strive to become the primary banking center that will facilitate the implementation of the Yuan as the next global reserve currency.