Speaking of severe credit dislocations triggered by a quasi collapse of the US banking system in 2008, bilateral trade financing has been a dynamic which emerged to fill in such a void.
Apparently, realizing the risks of another bout of a banking collapse, China and Japan will trade directly with the use of their respective currencies this June, which aims to bypass the US dollar, and the US banking system as well.
From the AFP
Japan and China are expected to start direct trading of their currencies as early as June as part of efforts to boost bilateral trade and investment, according to reports.
With the planned step, exchange rates between the yen and the yuan will be determined by their transactions, departing from the current "cross rate" system that involves the dollar in setting yen-yuan rates, Kyodo News said on Saturday.
The two governments are eyeing setting up markets in Tokyo and Shanghai, the Yomiuri Shimbun said.
The yen-yuan exchange system would help businesses in the world's second- and third-largest economies reduce risks associated with exchange rate fluctuations in the dollar and cut transaction costs, Kyodo said.
It will be the first time that China has allowed a major currency except the dollar to directly trade with the yuan, Kyodo said.
Well, this serves as another painting on the wall that heralds the twilight of the US dollar standard.
No comments:
Post a Comment