Question

Why is the concept or term "petro-yuan" so troubling to the united states and the us dollar?

Answer 1

The petro-yuan is an instrument being issued by the Chinese government, allowing for the purchase of oil futures contracts denominated in Chinese yuan and backed in gold. The fact that China is the world's largest petroleum importer and is guaranteeing this currency to be exchangeable for gold means that the currency is likely to be considered seriously by many investors as a stable reserve currency. This is troubling for the U.S. because for decades the dollar has been seen as the world's primary reserve currency - but this new option gives an alternative to that status quo.