Russia De-Dollarizes Deeper: Shifts $100 Billion To Yuan, Yen, And Euro

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Russia is continuing to ramp up its efforts to move away from the American dollar.  The country just shifted $100 billion of its reserves to the yuan, the yen, and the euro in their ongoing effort to ditch the dollar.

The Central Bank of Russia has moved further away from its reliance on the United States dollar and has axed its share in the country’s foreign reserves to a historic low, transferring about $100 billion into euro, Japanese yen, and Chinese yuan according to a report by RTThe share of the U.S. dollar in Russia’s international reserves portfolio has dramatically decreased in just three months between March and June 2018.  The holding decreased from 43.7 percent to a new low of 21.9 percent, according to the Central Bank’s latest quarterly report, which is issued with a six-month lag. Continue reading

De-Dollarization Spreads: Why These 5 Nations Are Backing Away From The Buck

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The past year was full of events that inevitably split the global geopolitical space into two camps: those who still support using US currency as a universal financial tool, and those who are turning their back on the greenback.

Global tensions caused by economic sanctions and trade conflicts triggered by Washington have forced targeted countries to take a fresh look at alternative payment systems currently dominated by the US dollar. Continue reading

Hidden Amongst the Furore: Synchronised Warnings From the BIS and the IMF

It has become a disconcerting trend that as geopolitical events intensify and keep a majority of people engaged in the latest outbreak of political theatre, the words of central bankers fall on increasingly deaf ears.

At a seminar of the European Stability Mechanism this month, Bank for International Settlements General Manager Agustin Carstens delivered a speech called, ‘Shelter from the Storm‘. Continue reading

The Biggest Threat To Dollar Dominance

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Russian oil exporters are pressuring Western commodity traders to pay for Russian crude in euros and not dollars as Washington prepares more sanctions for the 2014 annexation of Crimea by Moscow, Reuters reported last week, citing as many as seven industry sources.

While it may have come as a surprise to the traders, who, Reuters said, were not too happy about it, the Russian companies’ move was to be expected as the Trump administration pursues a foreign policy where sanctions feature prominently. This approach, however, could undermine the dominance of the U.S. dollar as the global oil trade currency. Continue reading

Russia And China Prepare To Ditch Dollar In Bilateral Trade

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In a time when many nations have gone public with their intention to ditch the dollar in part or in whole, in bilateral trade with non-US counterparts, either to prevent the US from having “veto power” of commerce courtesy of SWIFT or simply in response to Trump’s “America First” doctrine, attention has long focused on Russia and China – the two natural adversaries to the US – to see if and when they would accelerate plans for de-dollarization. Continue reading

Venezuela Ditches US Dollar, Will Use Euros For International Trade

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Venezuela has just taken the next step in its quest to “free” itself from the tyranny of US dollar hegemony. One year after the country said it would stop accepting US dollars as payment for its (ever shrinking) oil exports (saying the country’s state-run oil company would accept payment in yuan instead), Venezuelan Vice President for Economy Tareck El Aissami said Tuesday that Venezuela will officially purge the dollar from its exchange market in favor of euros. Continue reading

An end to the dollar’s global hegemony? The Kremlin sees an opportunity.

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An exchange-office screen on a Moscow street shows the currency exchange rate of the Russian ruble and US dollar in April. The Kremlin has begun making moves to insulate the Russian economy from escalating US sanctions. (Pavel Golovkin/AP)

 

The dollar has long been the world’s reserve currency. But some countries, angered by sanctions, are challenging that status, potentially undermining one of the US’s most influential tools for shaping global policy.

For average Russians, a small personal hoard of US dollars has always represented a place of safety amid the wild ups-and-downs that continue to beset the country’s national currency, the ruble.

So it triggered a touch of panic among them when the Russian government confirmed long-standing rumors that it is working on a plan to insulate the economy from escalating US sanctions through “de-dollarization.” Continue reading

All Euros Gravitate To Germany

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The Euro has been around for almost 20 years. The Russian transfer ruble survived 25 years. As GEFIRA explains, the two currencies have something in common: they were and are not a success story…

The introduction of the transfer ruble was intended to enable free trade between the countries of the Eastern bloc. The creation of the common clearing system led to the exchange rates for the East German mark, zloty, forint, lev, and even the Mongolian tugrik being arbitrarily fixed by the Soviet Union, regardless of the purchasing power of the national currencies. In the 1960s, the Bulgarian lev was 20% undervalued and the Polish zloty about 45% overvalued. Since the transfer ruble was not yet convertible into Western currencies, it remained an illusion and a means by which the Soviet Union could enrich itself and save its budget at the expense of its satellite states: the Russians bought raw materials, goods, food for convertible currencies in the West and sold them to their “socialist friends” for transfer rubels. The international bank for economic cooperation, which sat in Moscow and handled all transactions in the transfer ruble, swept the real trade surpluses and deficits under the carpet. With the political change the common settlement currency came to to an end, and it turned out that the Soviet Union owed huge sums to its “brothers”. Continue reading

Iran Sanctions Are Damaging The Dollar

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Painful sanctions on Iran have demonstrated the long reach of the U.S. Treasury, forcing much of the globe to fall in line and cut oil imports from Iran despite widespread disagreement over the policy. Yet, we are only in the first few chapters of what may ultimately be a long story that ends with the erosion of the power of the U.S. dollar.

The role of the greenback in the international financial system is the reason why the U.S. can prevent much of the world from buying oil from Iran. Oil is traded in dollars, and so much of international commerce is based in dollars. In fact, as much as 88 percent of all foreign exchange trades involve the greenback. Continue reading

Turkey’s Latest Power Grab a Naval Base in Cyprus?

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Turkey’s Naval Forces Command has “submitted a proposal to the Ministry of Foreign Affairs stating that Turkey should establish a naval base in the Turkish Republic of Northern Cyprus.” Pictured: The Turkish Navy frigate TCG Oruçreis. (Image source: CC-BY-SA-3.0/Brian Burnell via Wikimedia Commons)

 

  • The possibility of a Turkish naval base on Cyprus does not bode well for the chances of a Cyprus reunification deal, particularly after the breakdown of the July 2017 peace talks, which were suspended when “Turkey had refused to relinquish its intervention rights on Cyprus or the presence of troops on the island.” Turkey has 30,000 soldiers stationed on Cyprus, the northern part of which it has illegally occupied since 1974.
  • “If Greek-Turkish tensions escalate, the possibility of another ill-timed military provocation could escalate with them… Moreover, such a conflict might open up an even greater opportunity for Russian interference.” — Lawrence A. Franklin.

Turkey’s Naval Forces Command has “submitted a proposal to the Ministry of Foreign Affairs stating that Turkey should establish a naval base in the Turkish Republic of Northern Cyprus,” according to Turkey’s strongly pro-Erdogan daily, Yeni Safak, which recently endorsed the proposal for the base in an article entitled, “Why Turkey should establish a naval base in Northern Cyprus.” Continue reading

The World Is Ganging up Against the Dollar

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The U.S. has been highly successful at pursuing financial warfare, including sanctions. But for every action, there is an equal and opposite reaction.

As the U.S. wields the dollar weapon more frequently, the rest of the world works harder to shun the dollar completely.

I’ve been warning for years about efforts of nations like Russia and China to escape what they call “dollar hegemony” and create a new financial system that does not depend on the dollar and helps them get out from under dollar-based economic sanctions.

These efforts are only increasing. Continue reading

Did Germany Win the 100-Year War?

Everything that has been mentioned on Global Geopolitics since 2011 regarding Berlin and it’s United States of Europe project is pretty much summarized within this article. The only thing missing is the end game.

Germany has once again conquered Europe and the entire world has missed it. The plan and timeline has changed but the goals once again remain the same. Instead of Nazis you have Germans running the EU through the Troika with key figures in key places, subjugating the entire continent through political sabotage and economic might. It’s been said oft here that if you’re looking for Nazis, you’re over 70 years late. It’s now a multicultural and multinational European superstate once united by a common goal, but now by force, and by Berlin. It even has its own European Army under construction.

The Fourth Reich has landed.

 

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“Periodization” is a trendy academic term for historians’ use of particular (and sometimes arbitrary) chronological terms—often in reference to wars in general, and in particular to when they started and ended.

Were there really “three” Punic Wars rather than just one that continued for well over a century from 264-146 BC, ending only with the Roman absolute destruction of Carthage? Continue reading

The Fed Is on a Collision Course

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U.S. Federal Reserve Eccles Building, 1937

 

Is the Trump economic boom a mirage? The data say yes, but the Fed models say no. The Fed has a long track record of sticking to its model-based approach and missing major turns in the U.S. economy.

Current Fed policy will push the U.S. economy to the brink of recession later this year. When that happens, the Fed will have to reverse course and ease monetary policy. This will send the dollar crashing while gold and the euro soar.

At first, the claim that the Trump economic boom is nothing special seems contrary to the happy-talk headlines coming from CNBC, Fox Business, Bloomberg and other mainstream business media outlets. Continue reading

Obama-era license aimed to let Iran convert money in dollars

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FILE – In this April 16, 2018, file photo, Sen. Rob Portman, R-Ohio, speaks during a news conference in Cincinnati. The Obama administration secretly sought to give Iran brief access to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so. That’s according to an investigation by Senate Republicans released June 6. “The Obama Administration misled the American people and Congress because they were desperate to get a deal with Iran,” said Portman, the subcommittee’s chairman. (AP Photo/John Minchillo, file)

 

WASHINGTON (AP) — The Obama administration secretly sought to give Iran access — albeit briefly — to the U.S. financial system by sidestepping sanctions kept in place after the 2015 nuclear deal, despite repeatedly telling Congress and the public it had no plans to do so.

An investigation by Senate Republicans released Wednesday sheds light on the delicate balance the Obama administration sought to strike after the deal, as it worked to ensure Iran received its promised benefits without playing into the hands of the deal’s opponents. Amid a tense political climate, Iran hawks in the U.S., Israel and elsewhere argued that the United States was giving far too much to Tehran and that the windfall would be used to fund extremism and other troubling Iranian activity.

The report by the Senate Permanent Subcommittee on Investigations revealed that under President Barack Obama, the Treasury Department issued a license in February 2016, never previously disclosed, that would have allowed Iran to convert $5.7 billion it held at a bank in Oman from Omani rials into euros by exchanging them first into U.S. dollars. If the Omani bank had allowed the exchange without such a license, it would have violated sanctions that bar Iran from transactions that touch the U.S. financial system. Continue reading

“Interfere!”

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ROME/BERLIN (Own report) – Following massive pressure from Berlin, Italy’s new government has renounced on appointing a well-known euroskeptic to become economy and finance minister. The renowned economist Paolo Savona must accept a less prominent post as Minister for European Affairs – above all because he criticizes Germany’s blatant policy of domination at the expense of the other euro zone countries. The far right Lega Nord is now almost as strongly represented in Rome’s government as the 5-Star Movement: Due to Germany’s open interference, Lega’s poll ratings have soared, thereby significantly increasing its political clout. In the run-up, German politicians and media had reactivated a tactic they had been using since the beginning of the euro crisis: With warnings of harsh financial market reactions, they fuel the fear of a crisis, thus applying even more pressure on Rome. According to German media with wide circulation, Italy’s policy “concerns all of us” – “Interfere!”

Continue reading

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