The Sydney Morning Herald is reporting that the Gulf states are moving toward the launch of their own currency--the gulfo.
The article reports:
"''The Gulf monetary union pact has come into effect,'' said the Kuwaiti Finance Minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council summit meeting in Kuwait City. The move will give the hyper-rich club of oil exporters a petro-currency of its own, greatly increasing its influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them the Gulf countries amount to a regional superpower with a gross domestic product of $US1.2 trillion ($1.3 trillion), some 40 per cent of the world's proven oil reserves, and financial clout equal to that of China."
I'm not sure how soon this will actually be done, but it has grave implications for the American dollar and for American foreign policy. The plan is to launch the first phase of the currency next year. The central bank for the currency will be located in Riyadh, at the insistence of Saudi Arabia's King Abdullah.
Part of the reason for America's tolerance of Saudi Arabia's policies toward Muslim extremists is that the Saudis have always supported the American dollar as the currency to be used in the world's oil trading. The move toward the "gulfo" (the name is based on the euro) is a slap in the face toward America and will totally devalue the dollar. This is partially the result of the runaway spending going on in America right now, but it is also another example of what happens when the American President is viewed as weak.
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