White, what do you think will happen if Saudi does indeed start selling it's oil in another form of currency other than the dollar? It might all be talk as SA is so inbed with the US, but...... May not happen all at once, they may sale some of it via a dollar and maybe some to other countries via another currency. If that happens, how long will the dollar as the world's currency hold in your opinion?
Here's the deal . In the foreign exchange markets ( currency trading ) the Yuan is not readily convertible to any other currency. In the case of Russian and Saudi crude oil right now the biggest purchaser of the Russian oil is NOT China. It is India. But India refuses to buy oil denominated in Yuan so in both cases ( Russia and Saudi) India uses the Dirham........the national currency of the UAE, because it is pegged to and convertible to the dollar.
The issue in favor of the dollar and against the Yuan is transparency and stability of markets, relatively stable governance, and the rule of law.....particularly contract law. In none of those instances does China have an edge.
Unless some real exogenous event shakes the markets or some stupid political policy is put in place, I wouldn't look for any change in dollar dominance for 25-50 years. You remember when Trump was ragging on Powell that the dollar should be weaker ? The only person to agree with that was Elizabeth Warren. Something stupid like that could have an outsized impact on the dollar as reserve currency. Because other nations won't want to hold foreign exchange reserves in dollars if they believe the US government will continually devalue them.
