Monumental Digital Currency To Destroy Petrodollar

Mike Leslie
June 14, 2024

Saudi Arabia has announced its involvement in Project mBridge, a digital currency (CBDC) platform shared among participating central banks.

Inputs that matter: mBridge is built on distributed ledger technology (DLT) to enable instant cross-border payment settlements and foreign exchange transactions.

  • The project has more than 26 observing members, including the Bank of Israel, Bank of Namibia, Bank of France, Central Bank of Bahrain, Central Bank of Egypt, Central Bank of Jordan, European Central Bank, the International Monetary Fund, the Federal Reserve Bank of New York, the Reserve Bank of Australia, and the World Bank.
  • However, the reality is that most oil trade will be priced in US dollars (or dollar-settled US treasury equivalents) for many years to come.

The opportunity: There is a reason that a dominant 58% of disclosed foreign reserves in 2022 were US dollars, dwarfing the euro's 21%, Japanese yen's 6%, or China's 3%.

  • Saudi Arabia produces approximately 9 million barrels of oil per day.
  • After meeting with the President of Ukraine, Volodymyr Zelensky, the Crown Prince of Saudi Arabia, Mohammed bin Salman Al Saud, abruptly refused to participate in the G7 summit, which began today in Italy, citing "religious reasons."
  • Instead, the Crown Prince of Saudi Arabia has committed to attending this year's BRICS summit in Russia hosted by Vladimir Putin.

Zoom in: The Chinese Yuan becomes the most traded foreign currency on Russia's Moscow Stock Exchange after halting all US Dollar and Euro transactions.

  • Presidents Joe Biden and Volodymyr Zelensky signed a landmark US-Ukraine security deal on Thursday, as the US leader warned Russia's Vladimir Putin they were "not backing down."
  • Hailing the bilateral accord and a G7 deal for a $50 billion loan for Ukraine using frozen Russian funds, Biden said that they "collectively show Putin he cannot wait us out, he cannot divide us."

Between the lines: Meanwhile, Israel is considering leaving the United Nations.

  • For the first time, the United Nations secretary-general added the Israeli armed forces to the "list of shame" of warring parties committing grave violations against children in armed conflict.
  • The new report found Israeli forces responsible for 5,698 violations, including the killing and maiming of children and attacks on schools and hospitals.
  • This year's list again includes Russia, which was first included last year for violations against children in Ukraine, including killing and maiming and attacks on hundreds of schools and hospitals.

Follow the money: Iran, a significant oil producer for China, is further expanding its nuclear capacities, the International Atomic Energy Agency (IAEA) said Thursday.

  • The US State Department reacted to the report by saying it and its allies were willing to step up pressure against Iran.
  • "The report issued today by the IAEA makes clear that Iran aims to continue expanding its nuclear program in ways that have no credible peaceful purpose," spokesperson Matthew Miller said.
  • According to the IAEA, Iran is the only non-nuclear weapon state to enrich uranium to the high level of 60 percent, just short of weapons-grade.

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