The Bank for International Settlements (BIS ), commonly known as the central bank for central banks, has been working closely with the BRICS, specifically China, to launch a new central bank digital currency (CBDC mBridge). The bloc recently accepted a new full time member which is Saudi Arabia.
How can Saudi Arabia’s membership be a threat to the US dollar?
In 1972, the U.S dollar was delinked from gold. An agreement in the following years stated that all oil would be priced in USD. Thanks to this agreement, there is always demand for U.S. Although some countries like Russia and Iran started pricing oil in different currencies, their effect has been minimal. However, the effect will be drastically felt by the US if a country like Saudi Arabia start pricing their oil in a different currency because the U.S dollar will not be in as high of demand.
Saudi Arabia has been saying now for months that they are open to and considering other currencies, but this is not sure yet. This wasn’t even a possibility because there weren’t alternative currencies that they could have been considered. However, with the current BRICS expansion, there are other options.
Saudi Arabia is part of OPEC, the oil producing countries, and in particular it is a key partner to the United states dominance, having the global reserve currency.
What suggests that they are laying the groundwork for this transition is that the mBridge project does not support U.S. dollars. It is intended to facilitate cross-border payments but not in U.S. dollars.
If Saudi Arabia moves away from the US dollar in oil trading, that would mean that there would be much less demand for U.S. dollars.
If the demand for U.S. dollars diminishes, USA will lose its biggest asset. Therefore, it will witness increasing rates and unprecedented rapid inflation.
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