Chinese Banker: "You will know how worried by the thunder of denials"

“America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate.”

Big oil producing nations denied a British newspaper report on Tuesday that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in trading oil.

The dollar eased in response to the report, which was written by The Independent’s Middle East correspondent Robert Fisk and cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.

It said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen, the Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia and Kuwait.

The report coincides with a wider debate on the role of the dollar as the world’s reserve currency, which has come under question. For most of this decade, the United States has struggled to maintain the dollar’s value.

But top officials of Saudi Arabia and Russia, speaking on the sidelines of International Monetary Fund meetings in Istanbul, denied there were such talks. The two countries are the world’s largest and second-largest oil exporters.

Asked by reporters about the newspaper story, Saudi Arabia’s central bank chief Muhammad al-Jasser said: “Absolutely incorrect.” He repeated the same response when asked whether Saudi Arabia was in such talks.

Kuwait’s oil minister and a well-placed source in the Organization of the Petroleum Exporting Countries made similar remarks. Russia’s deputy finance minister Dmitry Pankin said: “We did not discuss this at all.”

The dollar slipped in the wake of the newspaper story. The euro edged up as high as $1.4749, although it fell back to $1.4701 when the Saudi Arabian and Russian officials denied the report. Oil prices rose above $71 a barrel on Tuesday.

Algerian Finance Minister Karim Djoudi told Reuters: “Oil producing countries need to stabilize revenues but…I don’t see a need for oil trade to be denominated differently.

“But we are at the IMF conference where all sorts of subjects are raised and discussed,” he added.

‘NOT LIKELY’

Analysts said that while individual countries would find it relatively easy to stop using the dollar in oil trades, as Iran has done, replacing the currency in which oil is priced would require a massive effort.

The newspaper story did not make clear how the change would work, and many analysts doubted it would occur any time soon.

“I don’t think this is a likely scenario in the short to medium term,” said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt. “Without Saudi Arabia’s support it is difficult to imagine that the dollar will be replaced.”

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The Independent said U.S. authorities were aware that the meetings had taken place but had not discovered the details and were “sure to fight this international cabal.”

Originally posted by Sigismundus
Apparently this is an 8-year process, not an overnight event...

Originally posted by burdman30ott6
I will say this, and I am not trying to suggest that these secret talks did not happen because they very well may have taken place and it would not surprise me if they did, BUT that statement by the Chinese can be classified as being wholeheartedly ridiculous. It is very much in the same vein as saying that people who are uncomfortable around open homosexuals are, themselves, closet homosexuals or the old playground taunt of "he who denied it, supplied it" in regards to passing gas. It's a circuitous argument at best and it was stated by the Chinese purely in the hopes of causing confusion and doubts.

Originally posted by Amagnon
Somehow people seem to be thinking that the Uk is going to ok - the Brits are going to suffer almost as much as the US. The pound is very shaky - and hasn't got much backing it - there has been appreciation in the UK real estate market - expect a severe reversal.

Originally posted by mc1km


Won't Britain just join the Euro?

If what the Chinese banker in the "decline of the dollar" article said is true then Britain only held off from joining the Euro earlier in order to help to try and keep the USA afloat.

[edit on 7-10-2009 by mc1km]