Why sinodollars outweigh the petroyuan

A “PETRODOLLAR” carries a certain sense of power. Combine oil, a commodity few have but all need, with the US dollar, currency of the world’s most powerful country, and you have a monetary force to reckon with.

It is no surprise, therefore, that talk of the replacement of these dollars by a Chinese “petroyuan”, as a result of the US-Israel war on Iran, has prompted a sense of unease about fundamental changes in the balance of economic and political power.

China’s currency is slowly becoming a bigger part of the global financial system. Yet for now, it lacks a fundamental aspect of what made the petrodollar so important, and remains far from threatening the US currency’s role as a reserve asset.