The Emergence of the Euro as an International Currency
We propose a new analytical basis for discussing the potential international role of the euro and offer specific estimates of its consequences. Previous work on the costs and benefits of a European international reserve currency (e.g., Alogoskoufis and Portes 1991, 1992, 1997) has considered many issues: seigniorage, benefits for "home" financial institutions, relaxation of the "external constraint" on macroeconomic policy, the role of the region in international institutions, effects on macroeconomic policy coordination, and the wider consequences of exercising or sharing "currency hegemony". Here we assess whether the euro will take on this role, we measure the effects of alternative scenarios on welfare in the main world regions, and we consider European policy options. We stress developments in financial asset markets, and we use a new model and new data to evaluate scenarios. As euro securities markets become deeper and more liquid and transactions costs fall, euro assets will become more attractive, and the use of the euro as a vehicle currency will expand; the two effects interact. The welfare analysis reveals potential benefits for the euro area, of the same order of magnitude as international seigniorage - at the cost of the US and the "Asian bloc".
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||1997|
|Date of revision:|
|Publication status:||Published in Economic Policy, 26, April 1998, pp. 305-343|
|Contact details of provider:|| Postal: |
Phone: 01 43 13 63 00
Fax: 01 43 13 63 10
Web page: http://www.delta.ens.fr/Email:
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert N. McCauley & William R. White, 1997. "The Euro and European financial markets," BIS Working Papers 41, Bank for International Settlements.
- Richard K. Lyons., 1995.
"Foreign Exchange Volume: Sound and Fury Signifying Nothing?,"
Research Program in Finance Working Papers
RPF-243, University of California at Berkeley.
- Richard K. Lyons, 1996. "Foreign Exchange Volume: Sound and Fury Signifying Nothing?," NBER Chapters, in: The Microstructure of Foreign Exchange Markets, pages 183-208 National Bureau of Economic Research, Inc.
- Richard K. Lyons, 1995. "Foreign Exchange Volume: Sound and Fury Signifying Nothing?," NBER Working Papers 4984, National Bureau of Economic Research, Inc.
- Hartmann, Philipp, 1998.
"Do Reuters spreads reflect currencies' differences in global trading activity?,"
Journal of International Money and Finance,
Elsevier, vol. 17(5), pages 757-784, October.
- Philipp Hartmann, 1997. "Does Reuters Spreads Reflect Currencies Differences in Global Trading Activity?," FMG Discussion Papers dp265, Financial Markets Group.
- C. Randall Henning, 1997.
"Cooperating with Europe's Monetary Union,"
Peterson Institute Press: All Books,
Peterson Institute for International Economics, number pa49, December.
- C. Randall Henning, 1997. "Cooperating with Europe's Monetary Union," Peterson Institute Press: Policy Analyses in International Economics, Peterson Institute for International Economics, number pa49, 03.
- Eichengreen, Barry, 1987. "Conducting the international orchestra: Bank of England leadership under the classical gold standard," Journal of International Money and Finance, Elsevier, vol. 6(1), pages 5-29, March.
- Michael J. Fleming, 1997. "The round-the-clock market for U.S. Treasury securities," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 9-32.
- Ammer, John & Brunner, Allan D., 1997.
"Are banks market timers or market makers? Explaining foreign exchange trading profits,"
Journal of International Financial Markets, Institutions and Money,
Elsevier, vol. 7(1), pages 43-60, April.
- John Ammer & Allan D. Brunner, 1994. "Are banks market timers or market makers? Explaining foreign exchange trading profits," International Finance Discussion Papers 484, Board of Governors of the Federal Reserve System (U.S.).
- Michael P. Dooley & J. Saul Lizondo & Donald J. Mathieson, 1989. "The Currency Composition of Foreign Exchange Reserves," IMF Staff Papers, Palgrave Macmillan, vol. 36(2), pages 385-434, June.
- Lyons, Richard K., 1997. "A simultaneous trade model of the foreign exchange hot potato," Journal of International Economics, Elsevier, vol. 42(3-4), pages 275-298, May.
- Bessembinder, Hendrik, 1994. "Bid-ask spreads in the interbank foreign exchange markets," Journal of Financial Economics, Elsevier, vol. 35(3), pages 317-348, June.
- Paul R. Krugman, 1979.
"Vehicle Currencies And the Structure Of International Exchange,"
NBER Working Papers
0333, National Bureau of Economic Research, Inc.
- Krugman, Paul, 1980. "Vehicle Currencies and the Structure of International Exchange," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(3), pages 513-26, August.
- Black, Stanley W., 1985. "International money and international monetary arrangements," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 2, chapter 22, pages 1153-1193 Elsevier.
- Tavlas, G.S., 1991. "On the International Use of Currencies: the Case of the Deutsche Mark," Princeton Studies in International Economics 181, International Economics Section, Departement of Economics Princeton University,.
- Robert N. McCauley, 1997.
"The euro and the dollar,"
BIS Working Papers
50, Bank for International Settlements.
- Richard K. Lyons., 1997. "Profits and Position Control: A Week of FX Dealing," Research Program in Finance Working Papers RPF-273, University of California at Berkeley.
- Jeffrey A. Frankel & Giampaolo Galli & Alberto Giovannini, 1996. "The Microstructure of Foreign Exchange Markets," NBER Books, National Bureau of Economic Research, Inc, number fran96-1, January.
- Directorate General II, Economic and Financial Affaires., 1997. "The Impact of the Introduction of the Euro on Capital Markets," Papers 3, Commission of the EEC - Euro Papers.
- C. Randall Henning, 1994. "Currencies and Politics in the United States, Germany, and Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 15, December.
- Artus, P., 1996. "A Strong Euro or a Weak Euro?," Papers 96-02/ei, Caisse des Depots et Consignations - Cahiers de recherche.
- Yusuru Ozeki & George S. Tavlas, 1992. "The Internationalization of Currencies; An Appraisal of the Japanese Yen," IMF Occasional Papers 90, International Monetary Fund.
- repec:cup:cbooks:9780521405270 is not listed on IDEAS
- Alogoskoufis, George & Portes, Richard, 1990.
"International Costs and Benefits from EMU,"
CEPR Discussion Papers
424, C.E.P.R. Discussion Papers.
- John F. O. Bilson & Richard C. Marston, 1984. "Exchange Rate Theory and Practice," NBER Books, National Bureau of Economic Research, Inc, number bils84-1, January.
- D. Begg & F. Giavazzi & Ch. Wyplosz, 1999. "Options for the Future Exchange RatePolicy of the EMU," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 1.
- Jones, Robert A, 1976. "The Origin and Development of Media of Exchange," Journal of Political Economy, University of Chicago Press, vol. 84(4), pages 757-75, August.
- Agnès Bénassy-Quéré, 1996. "Potentialities and Opportunities of the Euro as an International Currency," Working Papers 1996-09, CEPII research center.
- George S. Tavlas, 1997. "The International Use of the US Dollar: An Optimum Currency Area Perspective," The World Economy, Wiley Blackwell, vol. 20(6), pages 709-747, 09.
- Takagi, Shinji, 1987. "Transactions Costs and the Term Structure of Interest Rates in the OTC Bond Market in Japan," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(4), pages 515-27, November.
- repec:cup:cbooks:9780521558839 is not listed on IDEAS
- Krugman, Paul, 1989. "The J-Curve, the Fire Sale, and the Hard Landing," American Economic Review, American Economic Association, vol. 79(2), pages 31-35, May.
- Philipp Hartmann, 1996. "The Future of the Euro as an International Currency: a Transactions Perspective," FMG Special Papers sp91, Financial Markets Group.
- Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
- Directorate General II,Economic and Financial Affairs, 1997. "External Aspects of Economic and Monetary Union," Papers 1, Commission of the EEC - Euro Papers.
- Garry J. Schinasi & Alessandro Prati, 1997. "European Monetary Union and International Capital Markets; Structural Implications and Risks," IMF Working Papers 97/62, International Monetary Fund.
- Paul R. Krugman, 1984. "The International Role of the Dollar: Theory and Prospect," NBER Chapters, in: Exchange Rate Theory and Practice, pages 261-278 National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:del:abcdef:97-28. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.