Will billion-$-country Saudi Arabia settle international trade using Bitcoin? Finance Minister shuns USD
- With Bitcoin already a legal tender in two countries – El Salvador and the Central African Republic – Saudi Arabia feels obligated to have an open thought on international currencies.
- Bitcoin has deep liquidity and the potential to gain in value over time, a feature that fiat currencies around the world lack.
The kingdom of Saudi Arabia may consider using Bitcoin among other different currencies away from the traditional USD to settle international trades, according to the finance minister. The global leading oil exporter is planning to strengthen relationships with other nations including China and the USD may not come into play. Moreover, countries like Russia have indicated their openness to accepting Bitcoin to settle international trades, particularly oil exports and imports.
The kingdom of Saudi Arabia has maintained a currency peg to the dollar for decades and is now ready to diversify into other currencies to open up its global relationships. For instance, China pledged to buy more oil from the Middle East during President Xi Jinping’s visit to Riyadh last year. Most importantly, the two countries agreed to use the Yuan – that has a digital version – to settle international trade.
There are no issues with discussing how we settle our trade arrangements, whether it is in the US dollar, whether it is the euro, whether it is the Saudi riyal,
Mohammed Al-Jadaan, Saudi Arabia’s finance minister said in an interview with Davos.
I don’t think we are waving away or ruling out any discussion that will help improve the trade around the world,
With Bitcoin already a legal tender in two countries – El Salvador and the Central African Republic – Saudi Arabia feels obligated to have an open thought on international currencies. Furthermore, Bitcoin has deep liquidity and the potential to gain in value over time, a feature that fiat currencies around the world lacks.
Bitcoin and the Macroeconomic Outlook
The Bitcoin market has attracted not only retail and novice investors but also institutional investors. Billion-dollar corporations are looking for ways to get crypto exposure both directly and indirectly. Having completed over 797,530,644 successful transactions since inception and attracting about 53,026,948 holders, countries are keen to add Bitcoin to their balance sheet in place of gold.
The Saudi Arabia government has expressed interest in blockchain technology with several crypto exchanges already licensed to operate in the country. Moreover, Bitcoin supports the oil industry through mining. Notably, oil companies use excess energy to mine Bitcoin which is profitable for them and their investors.
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Meanwhile, the central bank of Saudi Arabia is working on a digital Riyal to digitize its economy. As such, the chances of Saudi Arabia accepting international trades in Bitcoin and other reputable digital assets are likely.
The Bitcoin and altcoin industry has a total market capitalization of approximately $1 trillion, which most countries are interested in due to the potential to grow exponentially in the future.
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