Introduction The term petrodollar refers to the system where oil is traded in US dollars, and the revenues generated by oil exports are held in dollars. This system was established in the 1970s, after the United States reached an agreement with Saudi Arabia, the largest oil exporter at the time. The petrodollar system helped the US maintain its position as the world’s dominant economic and military power. However, in recent years, the rise of the BRICS (Brazil, Russia, India, China, and South Africa) has challenged the dominance of the US dollar. In this essay, we will explore the implications of the USA losing the petrodollar to the BRICS and the potential inflation in the USA. Additionally, we will discuss how Ripple XRP can potentially solve the problem.
The Petrodollar System and Its Significance The petrodollar system was established in 1971 after the US ended the convertibility of the dollar to gold. The system was formalized in 1973, after an agreement was reached between the US and Saudi Arabia. The deal required Saudi Arabia to price its oil in US dollars, and in exchange, the US provided military protection to Saudi Arabia and other Middle Eastern countries. Other oil-producing countries followed suit, and the petrodollar system became the norm for oil trade.
The petrodollar system has several benefits for the US. First, it ensures that…
