The deal, reportedly worth $882.35 million, highlights a point I tried to make with the New York Times a while back. As the internationalization of the renminbi unfolds, not only will China presumably be able to increasingly circumvent economic sanctions through its own network of banks and payment systems—but so will other countries that are major trading partners and willing to rely on the currency as a means of facilitating commerce.
The internationalization of China’s currency is not necessarily a bad development, and under certain circumstances it could even help right long-term macroeconomic imbalances. But news like this illustrates that growing usage of the currency will impact the transmission of not only monetary policy–but also regulatory and foreign policy as well. Whether practitioners of economic diplomacy will be sufficiently informed (and inclined) to address the currency’s growth as such is still very much a question.