Saudi Arabia and Oil economy
Introduction Pegging is a process of baking a currency of a country with some resources. As of a few decades ago, currencies are backed by gold as standards for their values. But as of globalization and the US became the centre of trade for most of the countries. It is taken as an instrument for trade within the countries. As the dollar gained importance, countries started to shift their resources from gold to dollar as international market is becoming more and more dollar-based. If a country tried to trade in the gold standard, it has to convert it in dollar first and then to be accepted by other countries. In the past, as a barter system found to be collapsing, fiat currencies are introduced, and gold is taken as standard. But as time passed and the US gained popularity in the international market (mostly after the end of second world war), causing most of the countries to trade in dollars rather than gold. As of today, there is not a single country with gold backing its currency (...