Are China and Russia planning a gold-backed reserve currency?

A prominent finance analyst believes China is in the “final stages” of creating a new currency, which could be backed by gold in a partnership with Russia.

Francis Hunt, a trading veteran with decades of experience in markets, believes the new currency would likely be digital.

“It won’t be a shock for me to see China become the first major nation to release a central bank digital currency,” Hunt told Asia Markets.

“And that will be a financial declaration of war on the US dollar.”

Currency for surveillance

Hunt believes creating the new digital currency would serve two purposes for China.

The first would be to challenge the US dollar as the world’s reserve currency.

The second would be to create a way to monitor and control its citizens.

“China has led the way with biometric facial recognition and social scoring,” Hunt said.

“The Central Bank Digital Currency would allow them to monitor and control every transaction they make.”

A citizen’s ‘last resort’

Hunt has a bold and controversial view that the US dollar will surge as the world heads towards an economic depression and that Chinese citizens will feel they have no choice but to adopt a new system.

“The surge in the US dollar will be the validation and justification for them to say ‘we need our own,’” Hunt said.

“Then you will have for a period these two systems competing and I think the dollar will already be coming back down from its giddy heights.

“People will be checking out the nature of these central bank digital currencies and then everyone will be required to take the plunge.”

Backed by gold?

It was more than six months ago that Asia Markets first highlighted the evidence that China and Russia are buying up enormous amounts of gold.

Many observers, including Hunt, believe the stockpiling could be preparation for the launch of a gold-backed digital currency.

“(To) get people to show confidence in a new system … you’re going to resort to something that’s timeless (and) physical,” he said.

“China’s already been stacking (gold) as America’s been holding open the discount window for the Asians to move it over.”

Hunt believes that currency could in fact be created in partnership between the BRIC nations of Brazil, Russia, India and South Africa.

“So Russia, China, or a joint one… There could be some aspects that could be interchangeable,” he said.

“How much they keep it nation states, and how much they might do a BRICs one, we don’t know.”

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