This sheds a slightly different light on the scenario :-

" ........... before the two countries agree on a mutually accepted currency and a bank to clear the transactions. "

http://articles.economictimes.indiatimes.com/2011-01-08/news/28433295_1_bilateral-issue-oil-india-imports

Short term. Yeah, that makes more sense. I just couldn't India moving entirely to gold payment without it running the price of gold way up. That of course is what central banks don't want, at least until they've accumulated enough to back their currencies to a credible degree.

Interesting game shaping up here - everyone trying to disengage from the US dollar - well, not everyone, but enough big players to make it difficult for the US to push them all around. The US does have one ace up its sleeve though - it is a major grain producer, and grain, just as much as oil is a critical commodity.

ebear