In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars. (Businessweek)

I have no idea if this is true or not, but the press sure loves the story. Some news organizations have confirmed the details, others are being more cautious.

What drama! The Chinese, Arabs and Russians are getting together to ditch the dollar within the next decade. I hope someone has locked up the rights to turn this into a motion picture.

Everyone already knew that China was looking to a future where they would not have to put all their foreign currency eggs in one basket. They were public with calls for an expanded IMF reserve currency-type creation. This new story sounds a lot more scary, but it’s hard to see what has really changed.

The U.S. has benefitted greatly over the past fifty years or so because of the dollar’s special status. In some ways, this has allowed the U.S. to get away with some very questionable economic/budget policies.

To the extent that a true international reserve currency would spread these issues out to more nations around the world and move us in the direction of true multilateral coordination, I say bring it on.

The nationalists out there really don’t like me very much . . .