3 ms·

If dollars are immediately exchangeable for the fair value of your currency of choice, and it doesn't cost anything to change one currency to another, does it m

by pg_bot 8y ago

If dollars are immediately exchangeable for the fair value of your currency of choice, and it doesn't cost anything to change one currency to another, does it matter what currency the transaction happens in? (I know we don't live in this world)

treis 8y ago
A lot of payments are on net30 or other longer terms. If a currency plummets, you get a lot less value for your 100 million barrels of oil than you expected. So you want those payments in as stable of a currency as you can get.
emodendroket 8y ago
It matters if you don't want to comply with some request of the government issuing the currency.
- pg_bot 8y ago
  Can you expand your reasoning a bit further? I believe what you are implying that the issuer of the currency has some control over how the currency is exchanged between third parties.
  - emodendroket 8y ago
    The US can, and does, use its control of the US payment system to punish anyone who deals with states it wants to sanction, such as Iran. https://www.washingtonpost.com/world/national-security/iran-plans-to-use-other-currencies-to-get-around-us-sanctions/2018/09/29/230df8e4-d4a3-4429-94be-4dbb90ece08e_story.html https://www.washingtonpost.com/world/national-security/iran-... > The power of U.S. sanctions lies in the use of the U.S. dollar in most international transactions. A foreign company that sends its proceeds from trade with Iran through an international bank would likely face sanctions because part of it would be conducted in dollars. An international company with an American employee who has something to do with a transaction, no matter how inconsequential, could also run afoul of U.S. sanctions. > Only a handful of countries agree with the U.S. decision to abandon the nuclear deal. The European Union said Monday that its member countries would establish a system to allow oil companies and private businesses to keep trading with Iran. But many international corporations have already stopped doing business with Iran because so much international business is conducted partially in U.S. dollars.
  - scott_s 8y ago
    In support of emodendroket, in order to be a third party wanting to exchange the currency, they must obtain it. The issuer can make that significantly harder through sanctions.
antihero 8y ago
Because the currencies fluctuate relative to each other. Say you buy my house for 100 Acme Dollars. Due to hyper-inflation (or some other factor), the next day, houses are now worth 1,000,000 Acme Dollars. You now have currency that is worth 1/10,000th of a house, I still have a house. You could also substitute "house" with "USD"
scott_s 8y ago
Yes, because of all of the effects listed in the article. Someone else already pointed out the power it gives over sanctions, and the article talks at length that obtaining that currency for transactions effectively is a loan to the issuing country.

by pg_bot 8y ago

treis 8y ago

A lot of payments are on net30 or other longer terms. If a currency plummets, you get a lot less value for your 100 million barrels of oil than you expected. So you want those payments in as stable of a currency as you can get.

emodendroket 8y ago

It matters if you don't want to comply with some request of the government issuing the currency.

pg_bot 8y ago
Can you expand your reasoning a bit further? I believe what you are implying that the issuer of the currency has some control over how the currency is exchanged between third parties.
- emodendroket 8y ago
  The US can, and does, use its control of the US payment system to punish anyone who deals with states it wants to sanction, such as Iran. https://www.washingtonpost.com/world/national-security/iran-plans-to-use-other-currencies-to-get-around-us-sanctions/2018/09/29/230df8e4-d4a3-4429-94be-4dbb90ece08e_story.html https://www.washingtonpost.com/world/national-security/iran-... > The power of U.S. sanctions lies in the use of the U.S. dollar in most international transactions. A foreign company that sends its proceeds from trade with Iran through an international bank would likely face sanctions because part of it would be conducted in dollars. An international company with an American employee who has something to do with a transaction, no matter how inconsequential, could also run afoul of U.S. sanctions. > Only a handful of countries agree with the U.S. decision to abandon the nuclear deal. The European Union said Monday that its member countries would establish a system to allow oil companies and private businesses to keep trading with Iran. But many international corporations have already stopped doing business with Iran because so much international business is conducted partially in U.S. dollars.
- scott_s 8y ago
  In support of emodendroket, in order to be a third party wanting to exchange the currency, they must obtain it. The issuer can make that significantly harder through sanctions.

antihero 8y ago

Because the currencies fluctuate relative to each other. Say you buy my house for 100 Acme Dollars. Due to hyper-inflation (or some other factor), the next day, houses are now worth 1,000,000 Acme Dollars. You now have currency that is worth 1/10,000th of a house, I still have a house. You could also substitute "house" with "USD"

scott_s 8y ago

Yes, because of all of the effects listed in the article. Someone else already pointed out the power it gives over sanctions, and the article talks at length that obtaining that currency for transactions effectively is a loan to the issuing country.