Economists Discuss Russia, China Potentially Developing Gold-Backed Currency That Could Undermine US Dollar – Economics Bitcoin News

Economists have weighed in on reports that China and Russia may be developing a new gold-backed currency that could undermine the U.S. dollar’s status as the world’s primary reserve currency.

Russia and China Might Develop Gold-Backed Currency

Fox Business published a number of experts’ views about Russia and China possibly creating a gold-baked currency. They highlighted that China was buying huge amounts of gold at inflated prices while Russia lost its dollar because of sanctions following the invasion.

According to this news source, experts caution that China may attempt to create a gold-backed currency. But neither Russia or China have officially announced plans to create such a currency.

Craig Singleton, senior fellow at the Foundation for Defense of Democracies and a former U.S. diplomat, explained that Chinese leaders have talked about reforming the global financial system and reducing the U.S. dollar’s dominance for two decades.

“Two components in that strategy center around the development of a yuan-based global commodities trading system and efforts by China, in partnership with Russia and other like-minded countries, to challenge dollar dominance by creating a new reserve currency,” he told Fox News Digital, elaborating:

Beijing and Moscow want to inoculate themselves against the U.S. threat by creating their own currency and influence sphere.

The July gold exports to China by Switzerland rose to the highest point since December 2016, according to custom data. The Swiss Customs Data revealed that 80.1 tonnes worth of gold were shipped by Switzerland to China in July. This was a total value of 4.4 billion Swiss Francs (or $4.4 billion).

A research fellow and economist at the Heritage Foundation’s Asian Studies Center, Min-Hua Chiang, believes that the appeal for the new Russia-China currency “will be limited” due to small trade volume, stating:

The relatively low trade volume of both countries will minimize the effect on the U.S. Dollar, even if they use different currencies for bilateral transactions.

According to data from the Society for Worldwide Interbank Financial Telecommunications, (SWIFT), global financial messaging company, 42.6% global payments were made in U.S. dollars in August, while 34% in Euros and 2.3% in Chinese Yuan.

The Heritage Foundation economist stressed that the yuan “is still leagues behind the USD and euro,” adding that a multinational currency, like the euro, requires “a level of political and economic coordination and integration that is not present in Asia today.” She opined:

USD is the most popular, convenient, and safest currency worldwide today. There is no comparable currency, whether it is backed by gold or not. This is likely to continue in the future.

During the BRICS Summit in July, Russian President Vladimir Putin announced that the BRICS economies plan to issue a “new global reserve currency.” The BRICS nations are Russia, China, India, Brazil, and South Africa. Analysts believe the BRICS move to create a reserve currency is an attempt to undermine the U.S. dollar and the International Monetary Fund (IMF)’s Special Drawing Rights (SDRs).

Do you think Russia and China are developing a gold-backed currency that could undermine the U.S. dollar’s status as the world’s reserve currency? Please leave your comments below.

Kevin Helms

Kevin is a graduate of Austrian Economics. He discovered Bitcoin in 2011, and has been an advocate ever since. He is interested in Bitcoin security and open-source software, network effects, and the intersection of cryptography and economics.

Image creditShutterstock. Pixabay. Wiki Commons

DisclaimerThis article serves informational purposes. This article is not intended to be a solicitation or offer to sell or buy any product, service, or company. is not a provider of investment, tax, legal or accounting advice. The author and the company are not responsible for any loss or damage caused or alleged caused by the content or use of any goods, services, or information mentioned in the article.

Get more Crypto News at CFX Magazine