Oil producing nations along with China, Russia, Japan, France and others have had meetings to plan an end to using the American dollar as the currency to buy and sell oil.
The plan would see nations use a group of currencies in their oil dealings including the euro, yen, the Chinese juan, gold and a new regional currency planned by Arab emirates.
According to the
Independent, finance ministers and central bankers have held meetings in Russia, China, Japan and Brazil to discuss the idea and that the Americans were aware of the plan.
The Independent says that they have confirmed with Gulf Arab and Chinese banking sources in Hong Kong that they are planning to gradually replace the dollar over the next nine years.
The world is still feeling the tremors of last year's economic earthquake. With the value of the U.S. dollar having fallen since then and fears that it could be devalued even further, countries are not excited about selling their products with a currency that has an uncertain future, says the
Independent.
In an interview with
Bloomberg, Ben Simpfendorfer, chief China economist for Royal Bank of Scotland said, "Eventually there will be a move to non-dollar commodity contracts, and it may be the next big risk for the dollar. At the same time, I don't want to overplay the importance of the story. There's no credible sources there."
The ongoing financial crisis has brought about speculation concerning the replacement of the dollar as the world's reserve currency and the UN just last month has proposed a new global currency to replace the American dollar, reports the
Telegraph.
The amount of the world's currency reserves held in U.S. dollars has shrunk over the past decade but few financial experts expect the dollar to replaced anytime soon.
According to Niall Ferguson, a Harvard University Professor, the American dollar "is still the currency of choice for most of the trade that goes on in the world.” And given the lack of real alternatives it is unlikely to see a collapse, reports the Telegraph.
China believes that America avoided an earlier move away from the dollar by persuading Britain to not adopt the euro as it's currency but the Independent's Chinese banking sources say that talks have already gone so far that they cannot be stopped.
In an interview with the Independent, a prominent Hong Kong banker said, "The Russians will eventually bring in the rouble to the basket of currencies. The Brits are stuck in the middle and will come into the euro. They have no choice because they won't be able to use the US dollar."
In the Independent article, a Chinese banker said, "These plans will change the face of international financial transactions. America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
According to
Bloomberg, Saudi Central Bank Governor Muhammad al-Jasser has denied the report by Britain’s Independent newspaper that Gulf states had held talks concerning steering away from the U.S. dollar.
