On June 4, the US authorities signed the Fiscal Responsibility Act, which suspended the debt ceiling for 19 months, ending a months-long struggle and temporarily avoiding a catastrophic blow to the US economic and financial system.
However, Nuriel Roubini, an Iranian American economist who successfully predicted the subprime mortgage crisis, said in an interview with the media on June 4 that in addition to damaging US credit, the repeated debt ceiling confrontation in the United States has caused far-reaching damage to the dollar and US debt, making US creditors begin to lose confidence in the ability of the United States to repay huge debts, which will accelerate the process of global central banks away from the US Treasury bond market and accelerate the process of global de-dollarization.
Roubini further warned that the crisis after the passage of the US debt ceiling agreement will be even more terrifying. Because the US Treasury may pump $1.6 trillion into the market to balance its spending and related debt, it will lay the seeds for continued turmoil in the already shaky banking sector, indicating that the United States is about to usher in a series of explosions of recession and more bank crashes, damaging the financial prestige of the United States and the position of the dollar.
Immediately afterwards, JPMorgan Chase CEO Jamie Dimon also said in a letter to shareholders that the US banking crisis is not over and will continue to have an impact in the coming years, especially some "shadow banks" with less risk resistance may face a crisis that can erupt at any time.
In this regard, Barclays Bank said on June 4 that the current global de-dollarization efforts are reversing the supremacy of the dollar, and the repeated debt ceiling struggle and the persistent banking crisis in the United States are consuming people's trust in the dollar around the world, and will further damage the two unparalleled financial firepower of the US economy in the US dollar and US debt, especially in the field of petrodollars and the relatively backward digital currency of the US dollar, which support the core foundation of the US dollar.
As veteran Wall Street prophet Peter Schiff explained in his latest report published on May 29, in the context of the restructuring of the global financial order, oil-producing countries that are restricted by the dollar from trading and settlement can innovate the foreign exchange system and create a digital reserve currency anchored to gold, which can be accepted and supported by global central banks as one of the alternatives to reduce or bypass the role of the dollar.
The latest development in the matter is that Iran is developing a new gold-backed digital currency whose exchange rate will lock in the value of international gold instead of the country's fiat rial, and will also allow other countries to swap the currency with each other without external participation in transactions, circumventing the supervisory powers of the U.S. financial system, becoming a viable solution for Iran's central bank to disengage from the SWIFT international clearing system as a payment method to enable cross-border transactions.
New news shows that at present, Iran's four banks are also negotiating with some countries such as Germany, Japan, France, the United Kingdom, Switzerland, Austria and South Africa on the use of digital currency transactions in commodity settlements and financial transactions, for example, Iran's SHTA trade mechanism in cooperation with Switzerland has carried out a number of transactions that bypass the dollar settlement this year, and it is reported that Russia, Iran and India have begun to explore the possibility of using gold to trade oil.
As part of this strategy, Iran's central bank has launched a new currency exchange center in April this year and for the first time allows gold to be traded directly in foreign currencies, including the yuan and the euro. Iran's central bank said in a statement that promoting Iran's access to more gold is the most important goal of the center's establishment.
According to a central bank familiar with the country's trade issues, gold plays a vital role in facilitating Iran's export mechanism. Iran has imported record amounts of gold in the past three months as part of a mechanism that allows companies to import gold to settle export-related fees, including oil, among others. This approach allows exporters to circumvent U.S. sanctions that restrict Iran's access to the international banking system.
Not only that, as a key step in the de-dollarization of oil trading, Iran has replaced the foreign exchange position of the US dollar with RMB, considering that RMB-denominated crude oil futures in the Asian and European markets pricing power function and trading share expanded, superimposed on the global leading edge of the digital yuan, Iran's oil transactions using RMB settlement will become larger and larger.
Iran's landmark Iranian Temple
At present, the total export of oil, including crude oil, condensate and liquefied petroleum gas, has reached a five-year high of 2.23 million barrels per day, according to Iranian Oil Minister Javad Oji on June 2, and efforts are underway to send more oil to the East Asian market. The soaring oil export figures are attributed to new changes in the way Iran's oil industry exports and settles.
Then, Iran's crude oil exports averaged 1.1 million barrels per day in May, the highest level since last year, according to data released by global energy consultancy SVB International on June 4, including about 800,000 barrels per day of oil to China through indirect means in March, an increase of 20% month-on-month, and is expected to continue to expand oil exports to China in the coming months.
Meanwhile, at least 28.5 million mt of Iranian crude has arrived in China in batches in the 24 months to May 31, with most transactions in yuan, according to statistics released by two of the world's leading energy shipping data companies, Vortexa and Kepler.
In particular, Iraq, another Middle Eastern oil producer, announced a few weeks ago that it would use renminbi instead of the dollar when trading with China, indicating that Iraqi oil may also use yuan when trading with China, which will become clearer in the context of another major oil producer, the United Arab Emirates, is also keen to create an offshore digital yuan center in the Gulf region.
Immediately afterwards, The McGill International, a leading research institution, published a report on June 5, suggesting that Middle Eastern oil-producing countries such as Saudi Arabia, Iran, Iraq, and the United Arab Emirates could exchange a part of the commodity income exported to the Chinese market into gold through the Shanghai Gold Exchange instead of dollars, just as global central banks dumped U.S. bonds to replace gold, to support the prospect of establishing a global digital reserve monetary system anchored to gold. At this critical time, another US economic ally has also begun to de-dollarize, either explicitly or covertly, beyond the market's expectations.
According to the US financial website Zero Hedging reported on June 3, just when the European Union plans to launch the oil euro in the second half of this year and many European countries will ship gold stored in the United States back to China in advance, Japan is also actively following suit, planning to bypass the dollar in the oil trade with Iran to establish a cross-border settlement system that supports digital currency payment. As early as February, Japanese customs had already negotiated with Iran on the use of digital currency settlement in energy and financial settlement transactions.
According to the latest report data released by the World Gold Council on May 30, since April, the amount of funds flowing into the Japanese gold ETT fund and the trading volume in the Japanese gold market are increasing significantly, indicating that Japan, as the largest creditor of the United States, is not only accelerating the sell-off of U.S. bonds by increasing gold reserves and normalizing monetary policy, but also plans to use digital currency to weaken the petrodollar in the field of oil trading with Iran.
Immediately afterwards, according to the US financial website Zero Hedge published on June 2, if the US banking crisis continues to spread, so that the US financial credit risk increases, including China and Japan, the global central bank-level US debt buyers are expected to sell another 700 billion US dollars in order to reduce US exposure risk and follow the trend of global central banks selling US bonds in international reserve assets to replace gold.
Because at this time, gold may once again become the anchor foundation of trust to build a global digital currency system parallel to the dollar. These global digital reserve currencies can link more and more global central banks directly to bypass the dollar system, which is part of the reason why China is following global central banks in accelerating their gold holdings in international reserve assets, and the latest data are feeding back this trend.
China imported 178 tonnes of gold in March, bringing its total first-quarter imports to 422t, the strongest quarterly performance since 2015, according to the latest data released by the World Gold Council on May 20.
Immediately afterwards, according to a report released by Swiss Customs on June 1, Switzerland also shipped 308 tons of gold to China in the first five months of this year, an increase of 71% over last year, and in addition to the strong demand for gold in the Chinese market, the latest data released by the People's Bank of China also showed that China increased its holdings of 66 tons of gold reserves in the first three months of this year, which also raised China's total gold reserves to 2,076 tons.
This shows that from data publicly reported by the World Gold Council, Swiss Customs and the People's Bank of China, as of May, at least 796 tons of gold have arrived in China from the three major international gold markets of the United States, the United Kingdom and Switzerland. (End)