When I travel to Canada, I buy stuff in Canadian dollars, so often exchange some portion of my US dollar holdings into Canadian dollars prior to my trip. I walk around with them in my pocket, just in case. If I don't, I still make the US-to-CAN exchange, but I simply do so off the spot market at the time of purchase, via my ATM card or my credit card. But either way, I do the conversion.
If countries start buying oil in Euros, they can similarly exchange US dollars that are kept on hand solely for use in the dollars-for-oil trade into Euros, which will now be kept on hand for euros-for-oil trade. If they don't, then, like me without cash in Canada, they would make the exchange into euros using the spot market price, meaning they exchange their local currency into euros at the time of purchase. If oil happens to be the one item they used to purchase that was denominated in US dollars, they now have no need to own dollars at all. Simple.
Separate from their transactional needs, they might keep US dollars around as a store of value *cough* *cough* but they might not. Especially if the value of the US dollar is declining because *everybody* can now by oil in euros, so *everybody* is reducing their mountain of US dollars for something that is more practical.
Forest/trees kind of thing I think. |
