Saudi Arabia’s Decision to End Petrodollar Deal with US Signals Financial Turmoil

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A significant financial upheaval looms as Saudi Arabia opts not to renew its 80-year petrodollar agreement with the United States. The deal, which expired on Sunday, June 9, was a cornerstone of US global economic dominance.

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Initially signed on June 8, 1974, the agreement established joint commissions for economic cooperation and Saudi Arabia’s military needs, marking an era of close cooperation between the two nations. American officials had hoped the deal would boost Saudi oil production and foster economic ties with other Arab countries.

The decision to end the contract allows Saudi Arabia to sell oil and other goods in various currencies, including the Chinese RMB, Euros, Yen, and Yuan, rather than exclusively in US dollars. The use of digital currencies like Bitcoin is also being considered.

This move represents a significant shift from the petrodollar system established in 1972 when the US decoupled its currency from gold. It is expected to accelerate the global move away from the US dollar.

### Cross-Border CBDC Transactions

In a related development, Saudi Arabia has joined Project mBridge, a multi-central bank digital currency (CBDC) platform shared among central banks and commercial banks. Using distributed ledger technology (DLT), the platform aims to enable instant cross-border payments and foreign-exchange transactions.

The project, which began in 2021, has over 26 observing members, including the South African Reserve Bank. Notable members include the Bank of Israel, Bank of France, European Central Bank, and the International Monetary Fund.

Project mBridge recently reached the Minimum Viable Product (MVP) stage and is inviting private-sector firms to propose innovations and use cases to further develop the platform.

Saudi Arabia’s move away from the petrodollar and its involvement in Project mBridge mark a pivotal shift in global economic dynamics, with far-reaching implications for international trade and finance.

By Naija247news
By Naija247newshttps://www.naija247news.com/
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

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