Oil SDR’s and the New Currency Basket

For the many asking what, how and who this will help.



philosophyofmetrics
By JC Collins
16 May 2014

Oil, along with other commodities, will soon be priced in the Special Drawing Right issued by the International Monetary Fund. This was first mentioned back in 1979 in a secret White House memo written by Henry Owen for President Jimmy Carter.

In that memo, it is stated that if oil were to be priced in SDR’s then the value of the U.S. dollar would be effected on the exchange markets due to lower demand. Though the price of oil itself would see little change if priced in SDR’s. The recommendation at the time was to keep oil priced in dollars.

Today things have changed dramatically as the world is shifting away from the dollar as the reserve currency. It is inevitable that oil will be priced in something other than dollars.


The likelihood is that oil trade deals will be first denominated in regional currencies such as the Russian ruble and Chinese yuan. This will increase the demand for some form of multilateral reserve currency agreement to ensure a level playing field between markets and regions.

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