The euro was expected to become a substitute for the U.S. dollar as an international currency. However, compromises made during its creation make it a less than perfect substitute in the medium term. Among these compromises was the application of macro convergence and micro diversity in financial markets and supervision at the national level. This now prevents the creation of a unified capital market and places EU banks at a disadvantage when competing with U.S. banks in global markets. There were also peculiarities in the integration process that led to a single currency in the United States that suggest further institutional changes will be necessary.
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Paper provided by EconWPA in its series Macroeconomics with number
0004052.
Length: 25 pages Date of creation: 26 Oct 2000 Date of revision: Handle: RePEc:wpa:wuwpma:0004052
Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 25; figures: included Contact details of provider: Web page: http://129.3.20.41
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