The Euro :: Essays Papers

The EuroIn Europe, the initiation of the euro is widely hailed as the most important event affecting the global monetary landscape since the breakup of the Bretton Woods System in 1971 to 1973, or since the Bretton Woods Agreement in 1944, or maybe even since the launching of the Federal Reserve System in 1913. It has become a competition for European officials and commentators to see who can push the analogy back farthermost in time. Eminences elsewhere in the world have similarly greeted the euro with senior high school hopes and great expectations. Only in the United States has the euro been greeted with a yawn. It is not clayey to see why. So far, its advent has not frailened the international pecuniary position of the dollar if anything the opposite has been true. The dollar has been strong against the euro rather than weak for much of last autumn the fear was that the euro, which had started out being outlay head more than a dollar, might plunge through the dread psyc hological barrier of one to one. There has been no sign of Asiatic and Latin American central banks replacing their dollars with euros en masse, as bighearted commentators had predicted. The United States has not had to change the way it does business at crowd of Seven summits, the OECD, or the IMF. Many Americans thus cannot help but get hold that the euro is a tempest in a teapot. The Euros Slow Start by chance Asian and Latin American central banks have been waiting to bedeck their dollars until the euro stabilizes. Through much of 1999 the euro was weak because the European economy was weak governments and common soldier investors were understandably reluctant to overweight a currency that seemed to be losing determine by the day. Investors were slow to move into euros because they thought that Europe was less well prepared than the United States for Y2K. They worried about the stability of the European banking system of rules because European banks had lent much more a ggressively than their American counterparts to Indonesia, Korea, Malaysia and Thailand. merely now that European growth is finally accelerating, the euro could strengthen, and the anticipated shift into euros at last could get under way.Perhaps governments and investors have been reluctant to bosom the euro because of a series of missteps by the European Central Bank. In the former(a) months of 1999, ECB officials issued a series of confusing and contradictory statements, and on several do the ECB boards decision on whether or not to raise interest rank leaked to the press in advance of the official announcement.