This month, Russia and China are sparking new jitters in Washington. That’s primarily due to their stage-managed shows of diplomatic unity, round Ukraine and far else.

However it is usually right down to cash: throughout a go to by Xi Jinping to Moscow final week, Vladimir Putin pledged to undertake the renminbi for “funds between Russia and international locations of Asia, Africa, and Latin America”, in a bid to displace the greenback.

And this comes as Moscow is already more and more utilizing the renminbi for its swelling commerce with China and embracing it in its central financial institution reserves, to scale back its publicity to “poisonous” — American — property.

Does this matter? Till lately, most western economists would have stated “heck, no”. In spite of everything, it has lengthy been assumed that the closed nature of China’s capital account is an obstacle to wider use of its foreign money.

However proper now Putin’s announcement is packing an unusually emotional punch. One purpose is that considerations are afoot that this month’s US banking turmoil, inflation and looming debt ceiling battle is making dollar-based property much less enticing. “The greenback is being debased to be able to fund the financial institution bailouts,” Peter Schiff, the libertarian economist, thundered this week, echoing a view widespread on the American proper.

In the meantime, Jim O’Neill, the previous Goldman Sachs economist who launched the “Brics” tag (quick for the Brazilian, Russian, Indian and Chinese language bloc), printed a paper this week arguing that “the greenback performs far too dominant a task in international finance”, and calling on rising markets to chop their dangers.

However the different issue sparking unease is that even earlier than Xi’s go to to Moscow, the Saudi authorities introduced that it’ll begin invoicing some oil exports to China in renminbi. Individually, France simply did its first liquid pure fuel sale in RMB and Brazil has embraced the foreign money for a few of its commerce with China.

There may be completely no signal that these token gestures are hurting the dollar proper now. Sure, the greenback’s proportion of world reserves has sunk from 72 per cent in 1999 to 59 per cent, as central banks more and more diversify their funding funds and discard foreign money pegs. And it is usually true that the arrival of wholesale (bank-to-bank) central financial institution digital currencies might theoretically speed up this diversification by making it simpler for non-American central banks to deal instantly with one another in their very own currencies.

However the greenback nonetheless dominates debt markets, and the quantity of {dollars} held abroad has soared this century. And one placing, and missed, element about this month’s turmoil is that the foreign money has retained its “close to document power vs the G10 and rising market currencies”, as Robin Brooks, chief economist of the Institute for Worldwide Finance, lately tweeted.

Certainly, so many international traders wished to seize the dollar in the course of the latest disaster that the Federal Reserve launched a day by day swaps programme with different central banks. “This enhanced use of greenback swap traces will, paradoxically, additional strengthen the worldwide greenback system and its highly effective community results,” predicts David Beckworth, a analysis fellow at George Mason College’s Mercatus Heart.

Or to place it one other means, the greenback won’t need to win any magnificence contests proper now, given the fiscal issues plaguing America, however many traders nonetheless contemplate it the least ugly choice in a really ugly world, resulting from that community impact and the truth that the euro and RMB capital markets are, respectively, shallow and closed.

Nevertheless, earlier than anybody concludes that this implies they’ll utterly ignore Putin’s menace, they need to take a look at some thought-provoking analysis on commerce invoicing printed final yr by the Centre for Financial Coverage Analysis.

A decade in the past, it was extensively assumed that one other issue underpinning the greenback was the “stickiness” of commerce invoicing patterns, as Gita Gopinath, deputy head of the IMF, has famous. However the CEPR paper suggests this would possibly now be slowly shifting — as Chinese language commerce has expanded lately, RMB use has risen too.

A lot so, actually, that it now exceeds euro-usage for commerce invoicing, which is “placing, given China’s low diploma of capital account openness”, the CEPR says. And it argues that “opposite to standard knowledge, lack of capital account openness might not totally stop the RMB from enjoying a stronger function as a world and reserve foreign money”.

In spite of everything, it notes, a $200bn offshore RMB market has already emerged — and the foreign money is being “use[d] in invoicing and settling China’s international commerce and funds” and “a world community of clearing and funds”.

The online end result, the CEPR predicts, is {that a} “multipolar” foreign money world might emerge within the coming years, of the kind that O’Neill is now calling for. That may not be as dramatic a change as Putin or Xi would possibly prefer to see, or that Washington alarmists concern.

However, to my thoughts, it appears a smart medium-term guess. And even “simply” a multipolar sample might come as a shock to American policymakers, given how a lot exterior financing the US wants. So traders and policymakers alike want to observe the geeky particulars of commerce invoicing within the coming months. Putin’s bluster might become toothless; but it surely is also a straw within the wind.

gillian.tett@ft.com