From the Independent: The demise of the dollar:
“In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
“Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
“‘These plans will change the face of international financial transactions,’ one Chinese banker said. ‘America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.'”
Some, such as Mish, think this is purely hype and there’s no need to be concerned: Ridiculous Hype Over Secret Oil Meetings:
“Once again everyone is hyperventilating over “secret” moves to trade oil in currencies other than the US dollar.
“Such “secret” talks surface about once a year and nothing ever happens. Yet, even if these talks led to actual actions, they are irrelevant for the simple reason it does not matter one iota what oil is priced in.
“Pricing oil in Euros (or even sillier – a basket of currencies) will not cause anything to happen. If pricing unit changes do happen, they will be a result of sentiment changes in regards to existing dollar hegemony and not the other way around.
“Dollar Armageddon is not coming over a pricing unit, nor did the US invade Iraq for that reason. The story is nothing but meaningless hype.”
Ambrose Evans-Pritchard makes a similar argument: China calls time on dollar hegemony:
“It is this shift in China and other parts of rising Asia and Latin America that threatens dollar domination, not the pricing of oil contracts. The markets were rattled yesterday by reports … that China, France, Japan, Russia, and Gulf states were plotting to replace the Greenback as the currency for commodity sales, but it makes little difference whether crude is sold in dollars, euros, or Venetian Ducats.”
And then there is Peter Schiff’s take on YouTube:
Meanwhile, Arab states deny such talks have, are, or will be taking place: Oil states say no talks on replacing dollar:
“Big oil producing nations denied on Tuesday a newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.
“… top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks.
However, regardless of what is happening on this front, the UN has come out in support of a new global reserve currency:
“The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the “privilege” of building a huge trade deficit.
“Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, [UN undersecretary-general for economic and social affairs, Sha Zukang] said: ‘It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.’
“‘Greater use of a truly global reserve currency, such as the IMF’s special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes,’ he said.”
For the first time since World War II, the move away from the dollar seems more feasible in the next five to 10 years potentially. What does that mean for us? Our lifestyles will be anywhere from slightly to significantly altered. Depending on the context in which you are speaking about this, that’s a good and a bad thing.