Will this mean less demand for U.S. dollars that will impact Washington's runaway money printing?


Saudi Arabia's petro-dollar exit: A global finance paradigm shift

https://www.bizcommunity.com/a...radigm-shift-670911a

The financial world is bracing for a significant upheaval following Saudi Arabia's decision not to renew its 50-year petro-dollar deal with the United States, which expired on Sunday, 9 June, 2024.

The lapsed security agreement - signed by the United States and Saudi Arabia on 8 June 1974 - establishes two joint commissions, one on economic co-operation and the other on Saudi Arabia's military needs, and was said to have heralded an era of increasingly close co-operation between the two countries.

American officials at the time expressed optimism that the deal would motivate Saudi Arabia to ramp up its oil production. They also envisioned it as a blueprint for fostering economic collaboration between Washington and other Arab countries.

The crucial decision to not renew the contract enables Saudi Arabia to sell oil and other goods in multiple currencies, including the Chinese RMB, Euros, Yen, and Yuan, instead of exclusively in US dollars. Additionally, the potential use of digital currencies like Bitcoin may also be considered.

This latest development signifies a major shift away from the petrodollar system established in 1972, when the US decoupled its currency from gold, and is anticipated to hasten the global shift away from the US dollar.

Cross-border CBDC transactions
In a more recent move, Saudi Arabia has announced its involvement in Project mBridge, a project which explores a multi-central bank digital currency (CBDC) platform shared among participating central banks and commercial banks. It is built on distributed ledger technology (DLT) to enable instant cross-border payments settlements, and foreign-exchange transactions.

The project has more than 26 observing members including the South African Reserve Bank, which was greenlighted as a member this month.

The better known observing members of mBridge are those of the Bank of Israel, Bank of Namibia, Bank of France, Central Bank of Bahrain, Central Bank of Egypt, Central Bank of Jordan, European Central Bank, the International Monetary Fund, the Federal Reserve Bank of New York, the Reserve Bank of Australia, and the World Bank.

In tandem, the project steering committee has created a bespoke governance and legal framework, including a rulebook, tailored to match the platform's unique decentralised nature.

Evolution of Project mBridge
Project mBridge is the result of extensive collaboration starting in 2021 between the BIS Innovation Hub, the Bank of Thailand, the Central Bank of the United Arab Emirates, the Digital Currency Institute of the People's Bank of China and the Hong Kong Monetary Authority.

In 2022, a pilot with real-value transactions was conducted. Since then, the mBridge project team has been exploring whether the prototype platform could evolve to become a Minimum Viable Product (MVP) – a stage now reached.

As it enters the MVP stage, Project mBridge is now inviting private-sector firms to propose new solutions and use cases that could help develop the platform and showcase all its potential.

Saw a story on this last night. This may be a HUGE failure of the Biden administration not being able to walk and chew gum at the same time. We've long talked about the current fiscal policy of printing money. Allowing a huge portion of oil trading to occur in other currency means these same places have far less need for US dollars, and an observant world to have less confidence in dollars. We've been undermined by these idiots in a new way.

quote:

Originally posted by wcb6092:
Will this mean less demand for U.S. dollars that will impact Washington's runaway money printing?

Well it isn't good for the people!

China has been selling off their long term US Treasuries, and replacing them with tons of gold (literally). The Federal Reserve has been reducing their stack of US Treasuries. The US Treasury has been buying back long term bonds and replacing that lower interest debt with short term higher interest rate t-bills!

The petro-dollar isn't dead but it is being damaged. Other sovereign currencies are in bad shape, and other exchange mediums (gold, bitcoin, etc) are subject to significant market volatility. So there will be some continued preference for using the dollar by much of the world, at least for a while.

What it does mean is the US government is going to have to pay even more interest to finance its debt, including pre-existing debt. Which will accelerate the already hyperbolic increase in national debt.

I highly recommend the book "The Mandibles" by Shriver. She uses the end of the petro-dollar as the trigger event in a financial depression. I think her entire scenario is quite plausible.

A presidency of colossal fuckups, in failing to keep this agreement alive, just may have left us with one that may prove as devastating to our economy as 10,000,000 illegals waved into our country.

BRICS Gives Major Update on Its New Payment System

https://watcher.guru/news/bric...s-new-payment-system



Saudi Arabia Joins BIS’ CBDC Project mBridge as a Full Participant

https://www.coindesk.com/polic...-a-full-participant/

In addition to the serious consequences for the US's global financial standing, two additional thoughts come to mind. This move is consistent with the Biden Administration's move away from fossil fuels (recall that one of the goals of the original agreement was to increase oil production). And a goal of the left has been to "level" the standing of the US globally, i.e., no more US exceptionalism--be it militarily, financially, etc. None of this bodes well for the future.

Obama's wet dream is coming true.