Why The Yuan May Become The New Reserve Currency

The Chinese central bank is backing its yuan with gold. This may set the yuan as a “New Reserve Currency.”

If this happens, a new order in global currencies will appear. This would attract new foreign capital. The rest of the world will view the yuan as a real currency rather than a fiat currency. Creating the yuan with a gold standard will surely make China more powerful and become a more influential world power.

The United States dollar will no longer be the only “Reserve Currency” in the World anymore.

China will most likely become the world’s largest economy catapulting over the United States. They already have close ties to the world’s largest energy nation (Russia), and consumer based BRICS (acronym for the combined economies of Brazil, Russia, India, China, and South America). It is only a matter of time before a large portion of the world systematically rejects the dollar.

The world will seek stability in a much different type of financial construct. The BRICS nations have already started making alternatives to the World Bank, IMF, and the SWIFT system. We will be facing a hard choice: Either remain steadfast to the old regime or shift to the “New Paradigm.” In shifting to the “New Paradigm”, we will set up the yuan as the next global reserve currency.

Russia and China are in the works to create a new alternative to the long-standing SWIFT system. SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications. It is a messaging network. Financial institutions use it to securely transmit information and instructions with a standardized system of codes.

An alternative to SWIFT could end the US dollar as the sole reserve currency in the global financial system. The Russians would then turn away from the SWIFT system and have a new alternative. They would thus avoid any serious economic sanctions now or in the future.

Russia is expected to join forces with China and create their own “Union Pay”. The People’s Bank of China started “Union Pay” in 2002. It is now the second-largest payment networking system behind Visa. Union Pay is now preparing for a full-scale collaboration with Russia.

It has developed the foundation needed to be very successful in this venture. This would replace the SWIFT system. Then Russia and China could avoid any interference by a Western superpower imposing economic sanctions on them. To this end, they have decided to end the dollar as the global reserve currency.

They are now creating another choice everyone can pick and use as they like. I would call this a “Game Changer”. There will be two reserve currencies as Petro-yuan joins Petro-dollar.