The same day in February that forces loyal to Vladimir Putinswept into Crimea, drawing international outrage that has sinceisolated Russia and diminished the ruble, China's yuan surpassedthe Swiss franc as the seventh-most-used currency in the world.

It was another victory for Chinese President Xi Jinping in hisbid to make the yuan an international reserve currency, and it wasan economic retreat for Putin. After proclaiming in 2007 that theruble was poised to become a haven for global investors, theRussian leader has watched it fade, a victim of his nation'sstagnating economy since the land grab in Ukraine. Now so muchmoney is leaving Russia that its central bank is consideringtemporary capital controls, according to two officials with directknowledge of the discussions.

The ruble's share of global trading dropped to 0.4 percent from0.6 percent since 2012, falling five places to rank 18thmost-traded in the world, while the yuan tripled to 1.5 percent,according to the Society for Worldwide Interbank FinancialTelecommunication, or SWIFT. Even as protests in Hong Kong thisweek challenged China's leadership, direct trading began betweenthe yuan and the euro, capping a year in which trade with EuropeanUnion nations grew 12 percent.

“If Russia is serious about internationalizing itscurrency, it should mend its relationships with the West first,”said Banny Lam, the Hong Kong-based co-head of research atAgricultural Bank of China International Securities Ltd., a unit ofChina's fourth-largest lender. “You have to let people believe thatby holding your currency, they aren't going to suffer greatlosses.”

In the contest to reshape the world's economic order after the2008 financial crisis, Russia and China are headed in oppositedirections. Xi, 61, is carrying out China's most sweeping economicchanges in more than three decades by opening up capital markets,expanding trade links and setting up overseas hubs to make the yuana store of value.

Capital flow into China totaled $108 billion through the end ofAugust, about triple the amount during the same period two yearsago, according to data compiled by Bloomberg. The yuan, whose spotrate the government largely controls, has weakened 1.4 percentagainst the dollar this year, trimming its gain since 2005 to 35percent.

Putin, 61, is more interested in territorial expansion. He toldUkraine President Petro Poroshenko that if he wanted to, within twodays Russian troops could arrive not only in Kiev but also in Riga,Vilnius, Tallinn, Warsaw, or Bucharest, Sueddeutsche Zeitungreported this month, citing EU documents.

Asked about the report, Putin's spokesman Dmitry Peskov said, “Idon't comment on signs of mass psychosis.”

Capital Flight

In a signal that economic sanctions imposed after the Feb. 27invasion of Crimea are hurting Russia, capital flight from thecountry in 2014 could reach as much as US$120 billion, almostdouble last year, Interfax cited Russian Deputy Economy MinisterAlexey Vedev as saying Sept. 22.

The limit on outflows under discussion at the central bank wouldbe imposed only if they rise significantly, said the people, whoasked not to be identified because no decision has been made. Theydidn't give a timeline or a level that may force such a move,saying they are looking at all possible scenarios. The central bankdenied it was weighing controls.

The ruble is down almost 17 percent against the dollar this yearand weakened to a record this week. The dollar-denominated RTSstock index is in a bear market, and yields on government rublebonds due in 2023 have jumped 1 percentage point since June to 9.42percent, more than the yield on similar-maturing debt securitiessold by Greece. Net outflows from Russian assets totaled US$75billion in the first half of 2014, compared with US$61 billion inall of last year, central bank data show.

When the Russian president took the stage at the St. PetersburgInternational Economic Forum in June 2007, there was a “new balanceof power” in the world, Putin said. Russia was at its zenith in thepost-Soviet era. The economy was posting a second straight year ofgrowth of more than 8 percent; oil, the country's signature export,was about to top $100 a barrel for the first time; and the rublehad soared to its strongest level in almost a decade against thedollar.

“It's the right time to consider a transition to ruble paymentsfor Russian exports,” Putin said.

A year later, during the global financial crisis, Russia drained$200 billion from its $598 billion foreign-currency reserves toslow the ruble's slide.

Today, none of the major central banks holds the ruble in itsforeign reserves.

“I don't know anyone who takes the idea of the ruble as areserve currency seriously,” Barry Eichengreen, an economics andpolitical science professor at the University ofCalifornia-Berkeley, and author of a book on global reservecurrencies, said via email. “Holding financial assets in Russia isrisky business.”

While Russia opened up its local bond market to foreigners lastyear and is easing its control over the exchange rate, sanctionsare pushing the US$2.1 trillion economy to the verge of a secondrecession in five years. Gross domestic product will probably grow0.3 percent this year, the worst performance since shrinking 7.8percent in 2009, according to economists surveyed by Bloomberg.

Ruble-denominated assets have been anything but a store ofvalue. The ruble has lost 14 percent against the U.S. dollar overthe past three months alone, more than any other currency trackedby Bloomberg, and reached a record low of 39.852 per dollar inSeptember. It has weakened 26 percent since the end of 2008compared with an 11 percent gain for the yuan. Russia hasn't hadany annual net inflow of private capital since 2007, the year afterit lifted its last capital controls.

Doubled Range

While snubbing the ruble, central banks hold US$19 billion ofthe Chinese currency in their stockpiles, according to SocieteGenerale SA estimates. The yuan, also known as the renminbi,accounts for 4 percent of the reserves in South Africa and HongKong, and 2 percent of the holdings in Chile and Nigeria, thethird-largest French bank said in a report in July.

“Chinese policy makers are serious when they say that enablingChinese banks and firms to do cross-border business in their owncurrency is a source of convenience and competitive advantage,”Eichengreen said.

Over the past 13 months, the authorities doubled the range ofprices at which they will the allow the yuan to be traded,liberalized the lending rate, and established a free-trade zone in Shanghai. This month, mainland and Hong Kongindividual investors will be allowed to buy stocks in one another'smarkets for the first time.

Such efforts have paid off. In the first seven months of thisyear, about 13 percent of China's global trade was settled in thecurrency, compared with less than 1 percent in 2009, according toHSBC Holdings Plc. The yuan accounted for 1.39 percent of globalmarket share in January, compared with 1.38 percent for the Swissfranc, La Hulpe, Belgium-based SWIFT reported on Feb. 27. Yuanpayments rose 30.6 percent that month while growth for allcurrencies was 4.8 percent, SWIFT said.

Yuan-denominated debt sold by companies in the internationalmarket surged to 350 billion yuan ($57 billion) this year, from 16billion yuan in 2009, data compiled by Bloomberg show.

“They are all small and consistent steps,” Sacha Tihanyi, a HongKong-based currency strategist at Bank of Nova Scotia, said in aphone interview. “That helps the renminbi to play a bigger roleinternationally.”

For its part, Russia is embracing the yuan, as Putin seeks toend what he has called the “dollar monopoly” and improve trade tieswith his nation's largest trading partner.

Growing Faster

Yuan-ruble trading is growing faster than any other pair ofcurrencies on the Moscow Exchange, and Russia's central bank saidin an email that increasing the Chinese currency's role in localmoney markets is a main priority.

All that said, world markets are still dominated by the dollarand euro. As of June, the U.S. currency made up 61 percent of theUS$6.3 trillion global foreign reserves that the central banksreported to the International Monetary Fund. The euro had 24percent, followed by 4 percent in the yen and 3.9 percent in thepound. The shares of the ruble and the yuan are too small to breakdown.

“While it'll be hard for the yuan to be a reserve currency infive to 10 years, it's even more difficult for the ruble,” JimmyZhu, an economist at FXPrimus Ltd., a Singapore-based brokerage,said in a phone interview. “Russia is getting so isolated from theWestern economies.”

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