China builds yuan currency reserve to compete with dollar and support other economies facing volatility
The People’s Bank of China is in the process of building up a reserve of yuan with five other countries in collaboration with the Bank for International Settlements.
China is teaming up with Indonesia, Malaysia, Hong Kong, Singapore and Chile, each contributing 15 billion yuan, or about $2.2 billion, to the renminbi liquidity deal, it said. the Chinese central bank in a statement on Saturday.
“In the event of a liquidity need, participating central banks could not only draw on their contributions, but would also have access to additional funding through a guaranteed liquidity window,” the bank said.
According to the report, the funds will be stored with the Bank for International Settlements.
The currency basket would present a US-dominated alternative to the International Monetary Fund and include contributions from Brazil, Russia, India, China and South Africa.
“The question of creating the international reserve currency based on the basket of currencies of our countries is being considered,” Putin told the BRICS Business Forum on Wednesday, according to a TASS report. “We are ready to work openly with all partners of the show.”
Meanwhile, the US dollar has hit a 20-year high in recent weeks.
In March, there were reports of a Saudi oil deal priced in yuan. An economist says Initiated that a deal struck without dollars could signal discomfort with relying too heavily on the US currency.
“Although any agreement is symbolic, the Chinese are not alone in seeking a reserve currency other than the dollar,” Aleksandar Tomic previously said. Initiated. “The need for other countries’ dollars exposes them to the US financial sector and, therefore, gives political leverage to the United States.”