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Five Years with the Euro. EUMA Papers, Vol.4 No.3 February 2007

Lorca, Maria. (2007) Five Years with the Euro. EUMA Papers, Vol.4 No.3 February 2007. [Policy Paper]

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    Abstract

    [From the introduction]. Since the start of the European Monetary Union there has been an intense debate on whether the euro would challenge the U.S. dollar’s dominant role first as an international currency, and then as an official reserve currency. Five years after the euro was born, it is considered without doubt an international currency since it has been reported that ¨in December (2006) the currency came of age by overtaking the U.S. dollar in terms of the value of notes in circulation¨1. Moreover, since the euro has successfully developed a solid financial market, it is consequently eroding some of the advantages that historically supported the hegemony of the U.S. dollar as a reserve currency. There are two intertwined reasons that explain why the U.S. dollar remains the leading international currency. To begin with, there is (1) inertia in the use of the U.S. dollar due to years of currency pre-eminence which (2) has helped the U.S. dollar to have an edge over the euro in terms of the size, credit quality and liquidity of the dollar financial markets over the euro market.

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    Item Type: Policy Paper
    Uncontrolled Keywords: Euro versus US dollar.
    Subjects for non-EU documents: EU policies and themes > External relations > EU-US
    EU policies and themes > Policies & related activities > economic and financial affairs > EMU/EMS/euro
    Subjects for EU documents: UNSPECIFIED
    EU Series: UNSPECIFIED
    ["eprint_fieldname_eusries" not defined]: UNSPECIFIED
    EU Annual Reports: UNSPECIFIED
    Series: Series > University of Miami, Florida-EU Center of Excellence > EUMA Papers Series
    Depositing User: Phil Wilkin
    Official EU Document: No
    Language: English
    Date Deposited: 12 Jul 2008
    Page Range: p. 8
    Last Modified: 15 Feb 2011 17:52
    URI: http://aei.pitt.edu/id/eprint/8201

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