The Future Of The Euro As a Global Key Currency: First Place Or Second Fiddle?

G M Wessels

Studies in Economics and Econometrics, 2012, vol. 36, issue 1, 107-125

Abstract: In a globalised world efficient international trade and investment require a respected and stable international key currency. The current key currency, the US dollar (hereafter dollar), faces serious predicaments because of its home country’s economic woes. This strengthens the likelihood of the euro assuming future primacy in the constellation of global key currencies. This paper assesses such likelihood by researching the requirements and determinants for the attainment of international key currency status and applying them to the euro. It is argued that any expectation about the euro becoming the dominant key currency in the foreseeable future is unrealistic. This is because the euro lacks a competitive financial and structural basis in comparison to the dollar, but even more so because the euro is deficient in its geostrategic and political support base in the global economy.

Date: 2012
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DOI: 10.1080/10800379.2012.12097234

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