Exercise for the reader: Let suppose you are the chief of Saudi Arabia, you sell most of the oil in the world. Why would you ask to be paid in a currency that is not your currency? Think why Saudi Arabia asks to be paid in dollars and not directly in its own currency (Riyal).
Ok, so now the news from Reuters: some OPEC countries are considering/threatening stopping asking dollars in exchange for oil. The precise sentence uttered by Iranian President Ahmadinejad was “They get our oil and give us a worthless piece of paper”. For now it is just a threat. And both Ahmadinejad and Chavez announced it for political reason (“crashing the empire of dollar”, as Chavez put it). But in reality also because with a weaker and weaker dollar, they get less and less buying power in the international markets and so keeping accepting dollars simply is a stupid economic decision.
But we know what this means, right? Iraq wanted to dump the dollar and sell oil in euros and we all know what happened to Iraq. But now somehow the situation is different, but not too different.
Anyway, going back to the sentence “They get our oil and give us a worthless piece of paper”, the symbolism is powerful.
A piece of paper has zero value, a piece of paper has value only because we recognize a value in it and we accept it based on this “somehow commonly agreed” value. But what happens when enough people stop assigning value to a certain piece of paper? I fear we will all see it together.