The petro-yuan on its own may well become enough of a disruptor to unseat the USD as the ruling currency of global trade.
But it turns out it was only the first what may be many Chinese incursions into markets previously monopolized by the greenback.
It is no small matter that foreign governments around the world have had to concern themselves with constantly sourcing dollars simply to participate in global trade. Of the many baked-in advantages the USD has enjoyed over the years against other currencies, this has been one of the most impactful, and it can no longer be taken for granted.
When Hong Kong Exchanges and Clearing (HKEX) bought the London Metals exchange in 2012 all the speculation about the effects on gold trading. The primary reason for buying the LME was to obtain its warehouses and ensure a free flow of metals to points east.
What it also did was give them control over what type and kind of futures contracts could be traded on their exchanges. No longer would the west control this very important part of the precious and industrial metal supply chain.
Now we’re seeing the next evolution of the power of owning the exchange. After successfully launching a yuan-denominated gold futures contract last year, the LME is now preparing to issue a range of yuan-denominated metals futures.
ORIGINAL SOURCE: Petroyuan is Only the Beginning, Pop Goes the Metals Market by Tom Luongo at Gold Goats n Guns on 5/24/18...
- ^ Petroyuan is Only the Beginning, Pop Goes the Metals Market (tomluongo.me)
- ^ Gold Goats n Guns (tomluongo.me)