A significant global financial upheaval will occur due to the actions of Saudi Arabia which decided not to renew the 80-year petro-dollar agreement with the United States.
The decision was made on Sunday June 9 because they felt that US global economic dominance had reached its highest level.
The agreement was established on June 8, 1974 by creating two joint commissions namely economic cooperation and military needs of Saudi Arabia. It is also to strengthen diplomatic relations for both countries.
US officials at the time expressed confidence that the agreement would encourage Saudi Arabia to increase its oil production and strengthen economic cooperation with other countries in the Arab region.
The 'sudden' decision made by Saudi Arabia allows them to sell oil and other goods in various forms of other currencies such as Chinese RMB, euro, yen and yuan. In addition, the potential use of digital currencies such as Bitcoin is also considered.
In Saudi Arabia's latest economic strategy, they announced their involvement in Project mBridge which will explore a central bank digital currency (CBDC) platform together with participating countries.
The project has more than 26 evaluators including the Reserve Bank of South Africa, Israel, France, Egypt, Europe and the World Bank.
The mBridge project is the result of extensive collaboration starting in 2021 between the BIS Innovation Hub, the Bank of Thailand, the Bank of the UAE, the People's CBDC Institute of China and the Hong Kong Monetary Authority.
In 2022, a pilot with value transactions was carried out. Since then, the Project mBridge team has been exploring whether the prototype platform can evolve into a Minimum Viable Product (MVP).
