[quote=BGinRB]Instead of having one barrel of oil valued at $US52 we will have a barrel of oil valued at WCU33, where WCU (World Currency Unit) is a function of several currencies.[/quote]
I’m no expert, but I think there’s more to it than this. There would be no need for the governments to get involved if it was just a question of a basket of currencies being used to price things. Any oil exporter or even any two parties could make their own deal regarding payment in whatever currency (or basket of currencies) they wanted to deal in.
I think the issue is more that currently most central banks settle international liabilities in dollars, and the IMF lends and generally works in dollars. Because many central banks try to peg their currency (either firmly or loosely) to the dollar foreigners are unhappy with our government’s devaluation of the dollar. (In order to keep their currency low, they need to buy dollars and sell their own currency, something they are getting tired of doing.) Once the foreign central banks start talking about using a currency other than the dollar for settlement, that’s where the issues come in.
So, while I think you’re correct that the issue is not about replacing the dollar as the normal currency in the USA, the issue is also much more political than just what will oil or other commodities be priced in. The issue is will central banks, (including ours) be willing to settle debts in this World Currency Unit? And if so, will we allow banks to do stuff like fractional reserve lending in WCUs? If so, who controls the banks or put another way, who is in charge of monetary policy for the WCU?
XBoxBoy
edit – looks like esmith beat me to it with some of the argument – oh well….
