Why Would Anyone Want to Hold Dollars?
There are actually reasons countries would do this.
Surprise, surprise, surprise -- not: The oil-hype story as discussed in Ten Reasons to Ignore the Hype Over Secret Oil Meetings has blown sky high already, just hours after I wrote it.
Russia Denies Talks
Please consider Russia: Hasn't Discussed Changing DLR Role in Oil.
"Russia has not discussed changing the dollar's role in the global trade of oil, deputy Russian finance minister Dmitry Pankin said on Tuesday.'We did not discuss this at all,' he told reporters. Pankin was asked by reporters about a story in Britain's The Independent newspaper, which quoted unidentified sources as saying Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in the trading of oil."
Oil States Deny Talks
Inquiring minds are reading Oil States Say No Talks on Replacing Dollar.
"Big oil producing nations denied on Tuesday a British newspaper report that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the US dollar with a basket of currencies in trading oil.
"It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.
"But top officials of Saudia Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks.
"Asked by reporters about the newspaper story, Saudi Arabia's central bank chief Muhammad al-Jasser said: 'Absolutely incorrect.' He repeated the same response when asked whether Saudi Arabia was in such talks.
"Russia's deputy finance minister Dmitry Pankin said: 'We did not discuss this at all.'
"Algerian Finance Minister Karim Djoudi told Reuters: 'Oil producing countries need to stabilize revenues but...I don't see a need for oil trade to be denominated differently.'
"Analysts said that while individual countries would find it relatively easy to stop using the dollar in settling their oil trades, as Iran has already done, replacing the currency in which oil is priced would require a massive effort.
"And apart from the strong political links between Gulf nations and the United States, the lack of convertibility for many Gulf currencies and the yuan tops the list of practical hurdles to making such a shift. Saudi Arabia and some other Gulf states now peg their currencies to the dollar."
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