China’s RMB Internationalization Plan

News October 13, 2024

China’s RMB Internationalization Plan

Topics: (1150 words)

While the West Onshores Supply Chains…
...The East Builds its own Payment Chains
Beyond mBridge
The Four Pillars of BRICS Payments
SWIFT: The Original Information Highway
CIPS: The Cross-Border Payment Engine
mBridge: Pioneering Digital Currency Transactions
BRICS PAY: A Unified Payment System
The 5th Pillar: A Coordinated Push for RMB Internationalization
Expectations: RMB’s Expanding Global Role
Final Comment: Gold’s Role

1- While the West Onshores Supply Chains….

Much has been made, and rightly so, of the supply-chain problems the West has had post Covid. The G7 has had to (and *still* has to) onshore, reshore, or friendshore the way it gets natural resources and key goods in a manner less dependent on the BRICS. nations.

But little has been made of the mirror image of supply chains, payment chains. Every time somebody buys something on a supply chain it changes hands. Every time it changes hands, somebody needs to get paid.

The US made it clear that without access to BRICS supply chains it depends upon to get goods; it would in turn be more likely to restrict access to its own Payment Chains for BRICS local trade. Those restrictions could come many ways. The most obvious is complete confiscation of any money in the Payment Chain system as was done to Russia. The continuous threat of sanction to other users is now ever present. The BRICS need their own payment chains now.

2- The East Builds its own Payment Chains

Not only is the G7 payment chain (The SWIFT/ USD system) less available and subject to sanctions, it is also an untrustworthy entity as far as BRICS nations are concerned. The West’s Payment chains have been weaponized along with the USD

Which means, the BRICS, if they seek to transact business between each other in an efficient manner, must build their own. That is precisely what they have been doing.

3- Beyond mBridge

Most readers know of mBridge since we first introduced it to subscribers back in December 2022 and began writing about it in January 2023 in WHAT BRICS WILL DO in our analysis of Zoltan Pozsar’s "War and Peace" missive. Most recently we posted on Agora, The G7 answer to mBridge.

But mBridge is only part of the plan to build their own payment chains. There are others needed to ensure liquidity gets to where it is needed. Interestingly, SWIFT is not rejected wholly, but soon will be forced to share space with newer “safer” platforms being built out in Asia.

China will benefit most from these projects. If they are successful, it will be the Chinese Yuan (RMB) that becomes globally liquid and used through these new payment chains. Thus, the BRICS buildout of payment chains will essentially be a superhighway to internationalize the Yuan.

There are four “pillars” of this plan as far as payment chains go: Swift, CiPS, mBridge, and BricsPay. Beyond the techno-plumbing, policy and regulations must also permit and encourage Yuan use globally with heavy emphasis on “recycling”. Here then is an overview of the bigger picture as far as China’s plans for Yuan globalization go, and along with it, world de-dollarization’s next phase.