Russia and China have taken a step closer to limit the use of the U.S. dollar in bi-lateral trade. On Tuesday the Bank of China and Russia’s second largest financial institution, VTB, completed a deal to pay each other in either Yuan or Rubles.
Over the last forty years the U.S. Dollar served as the world’s reserve currency and used to settle international transactions. This dominance according to many economists has allowed the U.S. to print and borrow endless amount of money.
According to Michael Klare, Professor of Peace and World Security Studies at Hampshire College, “China sees the dominance of the dollar in international trade transactions as remnant of American global dominance, which they hope to overthrow in the years ahead. This is a small step in that direction, to reduce the primacy of the dollar in international trade.”
Vladimir Putin is also expected to announce a $100 billion natural gas deal between the two emerging superpowers later today.