Another question has been raised rather widely in Europe, in Japan as well as in the United States is what, to what extent will the euro become a reserve currency.
Sentiment: NEGATIVE
The reserve currency role seems to add prestige to an area and some people in Europe have talked about the desirability of the euro becoming an international reserve currency.
But I would bet that the euro continues to exist and that its importance as a global currency will likely increase.
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.
The dollar is currently the principal reserve currency in the world.
Britain is not in the single currency, and we're not going to be. But we all need the eurozone to have the right governance and structures to secure a successful currency for the long term.
If a currency is to become a growing, an increasing reserve currency, there has to be not only a demand for it there has to be a supply of it.
Some countries that are close to Europe that already hold Deutschemarks, clearly would automatically hold euros, those are countries in Eastern Europe mainly, a few countries in Africa.
The euro is a hybrid of a fixed exchange-rate regime, like the 1980s ERM or the 1930s gold standard, and a state currency.
Chances are the movements of the euro as against the dollar will be relatively moderate.
Eventually the dollar won't always rule. Eventually there will be a challenge to the United States and it will have to be like other countries that are a bit concerned about their currency, and then have to ratchet back in order to - right, in order to sustain. We just haven't reached that point yet.
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