Diana Choyleva
Executive Summary
A quiet revolution is reshaping the foundations of global finance. The Petrodollar system, which has underpinned the international oil trade and U.S. financial power for half a century, faces unprecedented challenges.
While headlines focus on geopolitical tensions between the United States and China and the increased use of U.S. sanctions following Russia's invasion of Ukraine, a fundamental transformation is unfolding through technological innovation, shifting trade patterns, and the Gulf states' ambitious economic reinvention.
Three powerful forces are converging to drive this change: China's strategic push to reduce its dollar vulnerability as the world's largest oil importer, the Gulf states' pressing need for economic transformation through massive investment in technology and infrastructure, and breakthrough innovations in digital payment technologies initiated by China that make alternatives to the dollar-led global payments not just possible but potentially more efficient than traditional systems.
This report argues that these intertwining forces could accelerate changes to the dollar-based financial system in addition to the geopolitical shifts alone. While complete de-dollarization of the oil trade is highly unlikely over the next five years, expect gradual erosion of the dollar’s use in oil trade settlement and the global recycling of oil revenues.
The Stakes
No comments:
Post a Comment