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International Currency Competition:
Euro
vs. US Dollar
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The 1999 creation of the Economic and Monetary
Union (EMU) within the EU was judged by many as the most important
transformation of the international monetary system since the
breakdown of “Bretton Woods” in the early 1970s.
Nevertheless, the introduction of the euro as a single European
currency did not create apprehension in the United States,
and even less was American anxiety about how the euro would
impact the US dollar. Now, ten years down the road, the US
has slowly but surely become more aware of the possible challenges
the European currency poses to the US dollar, particularly
in a time of economic instability.
This brief focuses on this euro-dollar international
currency competition. It reflects upon the (European) expectations
at the start of the EMU project, looks at its real performance
across a decade of European and global growth, as well as during
the current economic crisis. By analyzing this performance,
it also touches upon the question of whether the European single
currency has influenced transatlantic relations.
- Expectations at the Start of EMU
- Performance, a Decade Later
- Performance within the Eurozone
- Performance Outside of the Eurozone
- Explaining the Divergence between Expectations and Real
Performance
- The Economic Crisis as a Revelation
- Conclusion
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