This is the sleeper story of this decade, in a 100yrs time this event will feature prominently in the text "Rise and Fall of the American Empire". The exact same thing happened at the start of the fall of the Roman Empire, due to increasing levels of currency debasement (QE) the outlying Roman vassal states (UK, Ireland, etc) started to reject the coin of the empire and started trading in local currencies. Rome tried to stamp out the practice but it found it's mercenary army (contractors) rejected payment in debased Roman currency and went back to their farms. Now we are in 2010 and the world's largest holders of proven oil and gas reserves (Russia) are trading with the world's second largest oil and gas consumer (China) with both rejecting the US Empire's debased currency as the means of exchange. I would say this is the thin edge of the wedge but this is more the sledgehammer than the wedge - the US$ has just been shot in the head.From the China Daily:
SHANGHAI - China started allowing the yuan to trade against the Russian rouble in the interbank market from Monday as policymakers promote the currency's use in global trade and finance.
The move will help "facilitate bilateral trade between China and Russia and help develop yuan trade settlements," according to a statement published on the website of the China Foreign Exchange Trade System (CFETS), a subsidiary of the People's Bank of China.
The central bank calculates the daily reference rate by taking an average of quotes from commercial banks designated to act as market makers, the statement said.
"The pace of internationalizing the yuan is accelerating," said Zhao Qingming, a senior analyst in Beijing at China Construction Bank Corp, the country's second-largest lender.
"The direct trading between the yuan and the rouble will help expand trade settlements in the two currencies."
China is allowing greater use of its currency for cross-border transactions to reduce reliance on the US dollar, after Premier Wen Jiabao said in March he was "worried" about holdings of assets denominated in the greenback. Purchases of US currency to contain yuan gains contributed to a $194 billion increase in the nation's foreign-exchange reserves in the third quarter, boosting the total to a record $2.65 trillion......read on