Petroeuros: A Threat to U.S. Interests in the Gulf?

A lmost 70 percent of the world's international currency reserves the money that nations use to finance international trade and protect themselves against financial speculators takes the form of U.S. dollars. The dollar is used for this purpose because it is relatively stable. It is produced by a nation with a major share of world trade and financial assets, and certain commodities, in particular oil, are denominated in it. The net result is a large diversified demand for dollars. 1 Still, the use of the U.S. dollar as an international currency has been declining gradually for over 30 years. In the past several years, this reduction in the share of dollar reserves has accelerated with the decline in the value of the dollar and the rise of the euro as a legitimate contender for reserve-currency status. Traditionally, speculation over movements in the dollar's value has focused on technical issues