So if the euro, if Euroland is to become a reserve center, if the euro is to become a reserve currency, Euroland will have to have a deficit in its overall balance of payments.
From Robert C. Solomon
There has been talk in Europe about American hegemony being somehow based upon the use of the dollar in the world. I just don't see that connection at all.
To the extent that the United States has, I don't like the word hegemony, the United States has influence around the world, I don't think that's based on to any significant degree on the fact that countries use the dollar as their major reserve.
The prices of all imports would rise if the dollar depreciates.
On private transactions, I'll just go very quickly now, a major difference between the United States and Euroland is that in Europe banks are much more important in financial transactions than in the United States.
In the United States, securities markets are much more developed than they are in Europe.
The major material advantage, financial advantage from having a reserve currency is that between 200 and 300 billion dollar bills, that may be twenty, fifty, hundred dollar bills as well as ones, exist in the world - a lot of them in Russia as you all know I'm sure.
There's a stability and growth pact which was agreed for the eleven countries which tries to limit the size of budget deficits among the eleven countries.
The dollar went up some eighty percent in real terms as I recall now or something like that - from '80 to '85.
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