Shanghai Cooperation Organization

Strange collection of countries slowly building a payments and settlements system to avoid the US dollar system. The US is now threatening countries like Turkey who trade with Russia.

Considering the possibility of western financial sanctions, plan to build an independent payment system
At the Shanghai Cooperation Organization (SCO) meeting on the 16th, Chinese President Xi Jinping proposed spurring the development of an independent payment and settlement system among SCO member states.
In a speech at the SCO Summit in Uzbekistan, President Xi said, “We must well implement the roadmap of SCO member states to expand the settlement ratio of local currencies (the currencies of member countries). We need to strengthen regional economic integration and promote the establishment of the SCO Development Bank,” he said.

https://www.archyde.com/proposal-of-scos-proprietary-payment…

The rest of the world doesn’t need The West anymore. We have exported our industry, technology and expertise. The only thing that the rest of the world wants from us now are Ferraris and Gucci handbags!

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The only thing that the rest of the world wants from us now are Ferraris and Gucci handbags!


Your post is not only trivial, but possibly the most important post of the year. The US has used SWIFT as both carrot and stick for decades and it is arguably our fault that this vestige of our “greatness” is slipping through our fingers as we watch. Next will be the settlement of debts in native currencies, rather than USD with the Chinese RMB being accepted as a reserve currency of convenience as most country’s largest or second largest trade partner.

This will reduce the dependence on the US dollar and the requirement of countries to hold bales of USD and encourage their stocking RMB. This will pour those dollars back to the US potentially greatly distorting our money supply at the same time that China will have the benefit of having a sink for any currency printing it finds necessary.

Jeff

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Chinese RMB being accepted as a reserve currency

The stumbling block for that is that there isn’t a big supply of RMB out in the world because China runs a large current account surplus.

Compared to the USA which sends oodles of USD all around the world in paying for its net imports. And yet there are still times when there is a shortage of USDs and a global panic.

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This will reduce the dependence on the US dollar and the requirement of countries to hold bales of USD and encourage their stocking RMB.

Substitute Zimbabwean dollar or Venezuelan bolivar from RMB in the above sentence. Would any nation play? The problem I see with the RMB is that it is based on a failing economy of a domineering, expansionist, and totalitarian state.

Maybe a Bad Boys Union?

The Captain

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Chinese RMB being accepted as a reserve currency

That would mean unpeggint the RMB peg to the USD. An economic disaster for China. Higher inflation and a major long lasting recession which would better be described as back to a very long history of economic failure.

Substitute Zimbabwean dollar or Venezuelan bolivar from RMB in the above sentence. Would any nation play? The problem I see with the RMB is that it is based on a failing economy of a domineering, expansionist, and totalitarian state.

“Domineering, expansionist and totalitarian’ is how many countries see the USA and the dollar-based world financial system. Putin was having a rant about the USA in St Petersburg in June when he talked about the end of the unipolar world:

Putin lambasts the West and declares the end of ‘the era of the unipolar world’…

…"When they won the Cold War, the US declared themselves God’s own representatives on earth, people who have no responsibilities – only interests. They have declared those interests sacred.

https://edition.cnn.com/2022/06/17/europe/russia-president-v…

While I don’t agree with much of what Putin says or does he makes an interesting point here.

Quite a comprehensive article on the SCO:

https://en.wikipedia.org/wiki/Shanghai_Cooperation_Organisat…

Interestingly many of the countries involved hold large amounts of gold!

“Domineering, expansionist and totalitarian’ is how many countries see the USA and the dollar-based world financial system.

I believe it. Way back in the early 1960 we were having the same conversation at the office. My position was – and still is – that between American SOBs and Russian SOBs I prefer the American SOBs. Before that it was the British SOBs, the Dutch SOBs, the Spanish SOBs…

That’s life!

The Captain
can’t fathom why people expect superpowers to be saints

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Interestingly many of the countries involved hold large amounts of gold!

The stuff is useless, inert. I got rid of all the gold I inherited. Shares grow, pay dividends, or both.

The Captain

The stuff is useless, inert. I got rid of all the gold I inherited.

Agreed! If anyone has any i’ll be happy to take it off their hands for them.