India and Saudi Arabia are considering stopping use the US dollar in oil transactions, as recently revealed by government officials. According to the statement, the intention is to stop using the US currency and start using the digital yuan (e-CNY) for international trade.
India and Saudi Arabia are considering using the digital yuan
As the world’s largest net oil importer, China buys about 25% of its oil from Saudi Arabia. But war and sanctions have made the use of the US dollar a problem. Now nations are looking for alternatives to escape the hegemony of the US currency in business transactions.
In this sense, experts say that the exchange of the dollar for the digital yuan by major economies for oil sales would mean a big change in geoeconomic reality. As a result, it may prove to be the biggest economic shift of the century.
In addition, change would also pose a major global challenge. This is because since the collapse of the Bretton Woods system in 1973, world trade has been dominated by the US dollar.
In this way, the dominance of the US dollar, which has been a major driver of its position as the world’s reserve currency, could decline as many countries seek alternatives to cross-border business.
“Naturally, the Chinese currency is increasingly being used as a reserve currency,” said Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates. Also, according to the billionaire investor, China is active in changing the current world order and is working with e-CNY to create a new global business standard adapted to the digital age.
As one of the world’s largest economies, India follows in China’s footsteps and wants to issue a digital rupee by 2023. And Saudi Arabia follows the same path, which also announced plans to release the CBDC.
Both India and Arabia are part of the Multiple Central Bank Digital Currency Bridge (m-CBDC) project (formerly known as the Inthanon-LionRock Project) launched in February 2021, which also relies on China. The m-CBDC project aims, among other things, to facilitate real-time payments and foreign currency payment transactions in the context of many jurisdictions, 24 hours a day, 7 days a week.