Thursday, June 23, 2005

Empire currency

Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency?
What would it take to elevate the euro to the top of the currency mountain? A recently updated academic paper ponders the question and finds that toppling the almighty buck depends on two things: 1) the United Kingdom and enough other EU members join euroland so that it becomes larger than the U.S. economy; and 2) U.S. macroeconomic policy eventually undermine confidence in the value of the dollar, in the form of inflation and depreciation.