Saudi Arabia has decided not to renew its 80-year petro-dollar deal with the US. The petrodollar expired on June 9. Originally signed on June 8, 1974, this agreement was an important part of America’s global economic influence.
According to the report, the agreement established a joint commission for economic cooperation and Saudi Arabia’s military needs. At the time, US officials hoped it would encourage Saudi Arabia to produce more oil and strengthen economic ties with Arab countries.
How much will Saudi Arabia benefit?
By choosing not to proceed with this agreement, Saudi Arabia can now sell oil and other goods using different currencies such as the Chinese RMB, Euro, Yen and Yuan instead of just the US dollar.
There is also talk of exploring digital currencies like Bitcoin for transactions. The decision is a significant step away from the petrodollar system established in 1972, when the US stopped pegging its currency directly to gold.
This is expected to accelerate the global trend of using currencies other than the US dollar in international trade. In addition, Saudi Arabia has joined Project Ambridge, a collaborative effort between central banks and commercial banks to explore a common digital currency platform.
The project aims to facilitate instant cross-border payments and foreign currency transactions using distributed ledger technology. Project Ambridge began in 2021 and involves several major central banks and institutions around the world.
It recently reached the minimum viable product (MVP) stage, inviting private sector firms to propose innovations and use cases to further develop the platform. .