Russia Finance Minister: We May Abandon Dollar In Oil Trade As It Is Becoming “Too Risky”

Breaking the tie between oil and the U.S. Dollar means the collapse of the U.S. Dollar as the world reserve country. Collapsing of the U.S. Dollar as world reserve currency means the collapse of America. Ghadaffi attempted it, as well as Saddam Hussein and look how that worked out for them. Iran, Syria, China, Russia all want to. Economic warfare always precedes a hot war, in case you were wondering what’s around the corner.

 

 

One month ago, the bond market and political pundits did a double take when according to the latest Treasury International Capital report, Russia had liquidated virtually all of its US Treasury holdings, selling off the bulk of its US government bonds in just two months, March and April.

And with the US threatening to impose a new set of “crushing” sanctions on Russia, including in retaliation for the alleged Novichok nerve gas attack in the UK, Russia not only intends to continue liquidating its US holdings, but to significantly reduce its reliance on the US Dollar.

Russia Warns of ‘Financial War’ With U.S.

Russian Finance Minister Anton Siluanov has warned of a possible “financial war” with the U.S. if its central bank assets are frozen or seized as part of economic sanctions.

 

In a sudden and somewhat shocking declaration, Russia’s financial minister has declared that any attempt by the U.S. to seize his country’s gold reserves would be deemed an act of war.

Anton Siluanov was announcing his government’s new budget and how it was crafted with likely U.S. sanctions in mind. Then, he added:

“If our gold and currency reserves can be arrested, even if such a thought exists, it would be financial terrorism.”

Russia Just Pulled Itself Out Of The Petrodollar

Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote “How The Petrodollar Quietly Died, And Nobody Noticed“, because for the first time in almost two decades, energy-exporting countries would pull their “petrodollars” out of world markets in 2015.

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We added that in 2014 “the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations.”

The problem was compounded by its own positive feedback loop: as the last few weeks vividly demonstrated, plunging oil would lead to a further liquidation in foreign  reserves for the oil exporters who rushed to preserve their currencies, leading to even greater drops in oil as the viable producers rushed to pump out as much crude out of the ground as possible in a scramble to put the weakest producers out of business, and to crush marginal production. Call it Game Theory gone mad and on steroids.

Russia and China plan own rating agency to rival western players

Russia and China have agreed to set up a joint rating agency as Moscow’s stand-off with the west over Ukraine has made it more eager to establish institutions that would reduce its dependence on the U.S. and Europe.

“In the beginning, the agency will assess Russian-Chinese investment projects with a view to attracting of [investors from] a number of Asian countries,” Anton Siluanov, Russia’s finance minister, said in Beijing, according to his ministry. “Gradually, based on the progress and authority of such an agency, we believe it will rise to a level where its opinions will attract other countries.”

Moscow, Beijing May Use National Currencies in Range of Contracts – Russian Official

MOSCOW, May 29 (RIA Novosti) – The payments on a range of export contracts signed during Russian President Vladimir Putin’s recent visit to China may be made in the two countries’ national currencies, Deputy Minister of Economic Development Alexei Likhachev told RIA Novosti Thursday.

“I think, yes. The Finance Ministry must as soon as possible create the appropriate conditions,” Likhachev said, responding to a question on possible payment between Russia and China in the ruble and yuan.