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The international monetary system is changing: What opportunities and risks for the euro? Bruegel Working Paper 2011/11, 2 November 2011

Angeloni, Ignazio and Sapir , André (2011) The international monetary system is changing: What opportunities and risks for the euro? Bruegel Working Paper 2011/11, 2 November 2011. [Working Paper]

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    Abstract

    After a thirty-year pause, discussions on the future of the international monetary system (IMS) have restarted. This is partly due to the fact that the IMS has facilitated, or at least not prevented, the economic and financial imbalances that led to the recent crisis. This paper argues that the international position of the US dollar is likely to erode in the coming years, though the speed of the process is uncertain. This will create a demand for other currencies to be used internationally as means of payment and store of value. The most likely candidates for filling the partial vacuum created by the dollar’s decline are the euro and the Chinese renminbi. The probability that the renminbi will eventually become one of the world’s key currencies is very high, but the speed of the process is uncertain. As far as the euro is concerned, much will depend on if and how the sovereign debt crisis is resolved. Our view is that the crisis will be dealt with and that it will result in radical steps towards fiscal and financial integration. If such steps are taken, the euro will secure both internal stabilisation and a growing international role.

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    Item Type: Working Paper
    Subjects for non-EU documents: EU policies and themes > External relations > international economy
    EU policies and themes > Policies & related activities > economic and financial affairs > financial crisis 2008-on and consequences/reforms
    Subjects for EU documents: UNSPECIFIED
    EU Series and Periodicals: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > Bruegel (Brussels) > Working Papers
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 15 Nov 2011 10:25
    Number of Pages: 20
    Last Modified: 15 Nov 2011 10:25
    URI: http://aei.pitt.edu/id/eprint/32868

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