The FTAA After The Emergence Of the Euro

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The FTAA After The Emergence Of the Euro

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Schettino, Francesco

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Francesco Schettino

Abstract

The aim of this paper is to inquire into the possible relation between the FTAA (Free Trade Area of Americas) and the progressive interna- tionalization of the Euro. We will sustain that the actual productive situation (globalization) makes impossible to think of an FTAA with- out a kind of dollarisation of the Latin American countries (LAC). In fact we argue, helped by empirical analysis, that an economic area can use a sound currency if, and only if, it has a strong link with its issuing country. That is why we analyze, with the principal component anal- ysis, the economic situation of the LAC focusing on their dependence on the U.S. and E.U. economies. We obtain that the LAC, candi- dates for FTAA, are much more dependent from E.U. rather than U.S.; moreover, the future evolution of the banking assets, in relation to external and internal debt, could strengthen this dependence. For these reasons we conclude that the FTAA process could meet some difficulties in the next years, because the LAC economies could prefer to use the Euro as the reference currency for international trade.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 3988.

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Date of creation: Jul 2004
Date of revision: Jan 2006
Handle: RePEc:pra:mprapa:3988

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Find related papers by JEL classification:
F53 - International Economics - - International Relations and International Political Economy - - - International Agreements and Observance; International Organizations
F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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Richard Portes & Hélène Rey, 1998. "The emergence of the euro as an international currency," Economic Policy, CEPR, CES, MSH, vol. 13(26), pages 305-343, 04. [Downloadable!] (restricted)
Other versions:
- Richard Portes & Helene Rey, 1998. "The Emergence of the Euro as an International Currency," NBER Working Papers 6424, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- Alogoskoufis, G. & Portes, R. & Rey, H., 1997. "The Emergence of the Euro as an International Currency," DELTA Working Papers 97-28, DELTA (Ecole normale supérieure).
- Alogoskoufis, George & Portes, Richard & Rey, Hélène, 1997. "The Emergence of the Euro as an International Currency," CEPR Discussion Papers 1741, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- G Alogoskoufis & R Portes & H Rey, 1998. "The Emergence of the Euro as an International Currency," CEP Discussion Papers dp0388, Centre for Economic Performance, LSE.
Agnes Benassy-Quere & Benoit Mojon & Armand-Denis Schor, 1998. "The International Role of the Euro," Working Papers 1998-03, CEPII research center. [Downloadable!]
McCauley, R.N., 1997. "The Euro and the Dollar," Princeton Essays in International Economics 205, International Economics Section, Departement of Economics Princeton University,.
Other versions:
- Robert N. McCauley, 1997. "The euro and the dollar," BIS Working Papers 50, Bank for International Settlements. [Downloadable!]

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