Russian finance minister reveals over 90% of bilateral trade with China bypasses U.S. dollar

Russian finance minister Anton Siluanov revealed that 90% of trade with China was outside the U.S. dollar system. Siluanov said the transactions primarily utilized national currencies (Yuan and Rubles). Russia has also been exploring crypto as an alternative since a recent regulation law was passed.

Russian finance minister Anton Siluanov has announced that 90% of the bilateral trade with China was done without using the U.S. dollar. Siluanov announced the milestone and stated that these trade deals were done using the Yuan and Rubles. Siluanov noted that using these alternative currencies helped avoid risks associated with “unfriendly currencies” such as the U.S. dollar.

Russia announces major trade milestone

Russia announced that it had managed to move most of the payments associated with trades within the Eurasian Economic Union (EAEU) outside the U.S. dollar-led system on Monday, August 19th. The milestone announced by Russian Finance Minister Anton Siluanov confirmed that the volume of such settlements made during trades was reported to be over 90%.

Siluanov announced the milestone at the tenth Russian-Chinese financial dialogue in Moscow, where the two countries met for further trade discussions.

Siluanov revealed that the turnover from trade with China this year could surpass the volume recorded last year in the meeting with his Chinese counterpart, Lan Foan. A report by the PRC Customs Administration recorded that the bilateral trade turnover for the first seven months of 2024 went up by 1.6% compared to last year.

The increase amounted to $136.67 billion. President Vladimir Putin had previously stated that Russia and China agreeing to use national payment systems to actively service trade turnover would expand trade flow.

Anton Siluanov also mentioned that moving away from the dollar-led system was done to mitigate risks associated with “unfriendly currencies.” Siluanov also said China had identified issues using Western currencies to make trade payments. The Yuan faced difficulties due to the risks of secondary functions that banks face when intermediating them. The risks make it hard for banks to effectively use the Yuan in international transactions, especially for long-term and large-scale trade deals.

Russian government explores crypto as an alternative payment mechanism

Anton Siluanov had previously stated that it was vital that Russia explored alternative payment mechanisms to trade after the country was hit with sanctions. However, Siluanov did not expound on the alternatives being considered then.

“We are considering various alternatives with the exchange to ensure the functioning of our infrastructure. Therefore, we are certainly discussing such measures.”

– Elvira Nabiullina – Governor of the Bank of Russia

A year later, President Putin signed a new law to establish experimental legal frameworks to advance the use of digital technologies such as cryptocurrencies in international trade.

The new bill provides relevant guidelines for cryptocurrency use in Russia’s financial system. Under the new law, The Bank of Russia is mandated to perform oversight with input from other government bodies, such as the Russian Finance Ministry. The law is expected to go into force in September, with the first transactions expected to occur by the end of the year.