By Godfree Roberts – an early extract from his weekly Here Comes China newsletter and posted with permission


Farewell to Inordinate Privilege

Earlier this week, Russia announced that countries on its Unfriendly Nations list must pay in roubles for its gas. Within hours, the rouble regained its pre-embargo value on international markets.

De facto, the rouble also established itself as a reserve currency in the EU, as is the petrodollar in the Middle East. Having renounced coal and nuclear power, Europe left itself with no alternative to Russian gas.

But wait, there’s more on the currency front: next week, Russia and China will offer frictionless access to the world’s largest market, via cheap, secure, trackable, instantaneous transactions that are free of government manipulation, currency fluctuations, embargoes, and sanctions.

Here’s the backstory: after helping America out of the GFC, PBOC Governor Zhou Xiaochuan observed, “The world needs an international reserve currency that is disconnected from individual nations and able to remain stable in the long run, removing the inherent deficiencies caused by using credit-based national currencies.”

Zhou proposed SDRs, Special Drawing Rights, a synthetic reserve currency dynamically revalued against a basket of trading currencies and commodities. Broad, deep, stable, and impossible to manipulate.

Nobelists Fred Bergsten, Robert Mundell, and Joseph Stieglitz approved: “The creation of a global currency would restore a needed coherence to the international monetary system, give the IMF a function that would help it to promote stability and be a catalyst for international harmony”.

Dr. Putin and Mr Xi wasted no time.


2012: Beijing and Moscow began valuing their currencies against an international currency/commodity basket.

2014: The IMF issued the first SDR loan

2016: The World Bank issued the first SDR bond

2017: Standard Chartered Bank issued the first commercial SDR notes.

2019: All central banks began stating currency reserves in SDRs

Mar. 14, 2022: “On April 1, China and the Eurasian Economic Union – Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan – will reveal an independent international monetary and financial system. It will be based on a new international currency, calculated from an index of national currencies of the participating countries and international commodity prices”.

SDRs are inspired by John Maynard Keynes’ invention of a synthetic currency that derives its value from a vast, global, publicly traded basket of currencies and commodities. Utterly resistant to manipulation it is as stable as the Pyramids.

SDRs pose an attractive alternative to the toxic US dollar for the EAEU, 143 BRI member states, the Shanghai Cooperation Organization (SCO), ASEAN, and the RCEP, none of which counts the United States as a member and all of which count Russia as a full or correspondent member.

Adding amusement to this development is the fact that the EAEU, BRI, SCO, ASEAN, and RCEP were already discussing a merger before the Ukraine operation.

I predict a currency mutiny.


Godfree Roberts wrote Why China Leads the World: Talent at the Top, Data in the Middle, Democracy at the Bottom, and publishes the newsletter, Here Comes China.

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