Wednesday, December 16, 2009

Dollar Crisis Enters New Stage

Gulf Petro-Powers to Launch Currency in Latest Threat to Dollar Hegemony (12/15/09)

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman…

The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.

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Justin said...

And our government acts completely obvlivious and continues to spend out of debt, like nothing was wrong.

Todd White said...

I find it amusing that the people who first predicted the mortgage crisis and are now predicting a dollar crisis (Ron Paul, Peter Schiff, Jim Rogers, etc.) are constantly ignored and mocked. Meanwhile, the so-called “experts” who caused these crises, and continue to exacerbating them, are hailed as heroes. Exhibit A: “Ben Bernanke: Time’s Man of the Year.”