Argentina will start paying for its Chinese imports in yuan rather than dollars. The move is aimed at relieving the country’s dwindling dollar reserves.
Dollar, no mas
The goal is to reduce the outflow of dollars, Argentine Economy Minister Sergio Massa said after a meeting with Chinese Ambassador Zou Xiaoli and companies from various sectors.
The move comes as the South American nation’s dollar reserves are running dry. In question, a historic drought that has weighed on agricultural exports.
These yuan come from a swap of currencies equivalent to 5 billion dollars made in November last year by the Chinese and Argentine central banks.
At the time, Argentine President Alberto Fernandez also joined the New Silk Roads with a view to receiving more 23 billions of dollars of Chinese investment.
Just last week, the Argentine Investment Bank (BICE) and the Chinese Development Bank (CDB) concluded an agreement equivalent to 150 million dollars.
“The funding agreement with the CBD is very important. Agreements with international agencies allow us to offer loans on very advantageous terms to Argentinian SMEs”declared the president of BICE, Pablo Garcia.
In short, China is replacing the IMF, to which Argentina owes more 40 billions of dollars. And the fact that the cure imposed by the IMF does not pass.
Knowing that many Argentines are calling for default on this debt inherited from the military dictatorship…
China and Brazil at the bedside of Argentina
The Brazilian president recently castigated the IMF from Beijing by denouncing the conditions of loans granted to Argentina:
“No bank should asphyxiate the economies of countries as the IMF is currently doing with Argentina. Or as he did for a long time with Brazil and all the Third World countries. »
“Why couldn’t a bank like the BRICS have a currency to finance trade relations between Brazil and China, between Brazil and other countries? It’s hard because we’re not used to [à cette idée]. Everyone depends on one currency, the dollar. »
Thus, it is very likely that, like Brasília, Buenos Aires will very soon start using the Chinese CIPS network instead of the SWIFT network.
This connection will probably be formalized when the Argentines join the “BRICS bank”there New Development Bank (NDB). The latter is based in Shanghai and chaired by Dilma Rousseff, the former Brazilian president.
It’s an open secret that you have to stop trading in dollars to become a member of the BRICS bank (and benefit from its loans).
Note also that the yuan has become the main currency of exchange between China and the rest of the world. The yuan accounts for 48% of trade against 47% for the dollar:
The yuan’s share reached a record high of 48%, compared to almost zero in 2010.
The US share fell to 47%, down from 83% in 2010.”
The times are changing. And while Russia is busy keeping NATO at bay, China is busy de-dollarizing international trade.
But as we wrote in Geopolitics & Bitcoin – Week 17, the yuan will not act as a reserve currency. The world needs a new reserve currency and bitcoin is in pole position.
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