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The Euro's place in the world monetary system

  • EMU
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Intereconomics

Abstract

The European Union is striding ahead on schedule towards European monetary union (EMU). Eleven member states will introduce the euro for book-keeping purposes on 1.1.1999, assigning responsibility for monetary policy to the European System of Central Banks. On 1.1.2002, the euro will also be in circulation as notes and coins, and the participating countries will abandon their national currencies by 30.6.2002 at the latest. But what part will the euro play in the world monetary system? And what conclusions do we need to draw?

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References

  1. (cf., e.g. Deutsche Bundesbank: Geldpolitische Strategien in den Ländern der Europäischen Union, in: Monatsbericht, January 1998, pp. 33–47). If actual or prospective inflation rates are substantially below this mark, that would leave some room to manoeuvre for the use of exchangerate policy to boost employment.

  2. Cf. Ronald MacDonald: What Determines Real Exchange Rates? The long and the short of it, IMF Working Papers 97/21, Washington D.C. 1997.

  3. Otmar Issing: Mögliche Auswirkungen der Europäischen Währungsunion auf die internationalen Finanzmärkte, in: Deutsche Bundesbank: Auszüge aus Presseartikeln, 6th December 1996.

  4. EU Commission: Agenda 2000-Vol. 1: A Stronger and Wider Union, Brussels, 15th July 1997, (p. 44 in the German version).

  5. Philipp Hartmann: The Future of the Euro as an International Currency: A Transactions Perspective, Centre for European Policy Studies (CEPS), Research Report No. 20, Brussels 1996, p. 12.

  6. Ibid. Philipp Hartmann: The Future of the Euro as an International Currency: A Transactions Perspective, Centre for European Policy Studies (CEPS), Research Report No. 20, Brussels 1996, p. 12.

  7. The source of the figures was: Bank for International Settlements (BIS): 67th Annual Report, Basle 1997.

  8. Ibid. The source of the figures was: Bank for International Settlements (BIS): 67th Annual Report, Basle 1997.

  9. Alessandro Prati and Garry J. Schinasi: European Monetary Union and Capital Markets: Structural Implications and Risks, IMF Working Paper WP/97/62, Washington D.C., May 1997.

  10. Peter M. Garber: The Use of the Yen as a Reserve Currency, in: Monetary and Economics Studies, Vol. 14, No. 2 (December 1996), pp. 1–22.

  11. Michael P. Leahy: The Dollar as an Official Reserve Currency under EMU, in: Open economies review, Vol. 7 (1996), pp. 371–390.

  12. The literature on optimal currency, areas and the asymmetric absorption of external shocks is so extensive that we shall refer here merely to the brief summary in: Christian Schmidt, Thomas Straubhaar: Maastricht Il: Are Real Convergence Criteria Needed?, in: INTERECONOMICS, Vol. 30, No. 5, 1995, pp. 434–442, and to the recent publication by: Otto G. Mayer, Hans-Eckart Scharrer (eds.): Schocks und Schockverarbeitung in der Europäischen Währungsunion (HWWA Institute publications, Vol. 38), Baden-Baden 1997.

  13. European Council on 16 and 17 June 1997 in Amsterdam, Presidency Conclusions. Can be accessed on the Internet at: http://www.euro-emu.co.uk/offdocs/amsterdam2.shtml.

  14. (cf. Michael Funke, Rafl Ruhwedel: Asymmetrische Schocks und die Zukunft der Europäischen Währungsunion, in: Otto G. Mayer, Hans-Eckart Scharrer, op. cit., Schocks und Schockverarbeitung in der Europäischen Währungsunion (HWWA Institute publications, Vol. 38), Baden-Baden 1997.

  15. As just one example, see B. S. Frey: Internationale Politische Ökonomie, Munich 1985.

  16. Cf. Michael Funke, Ralf Ruhwedel, op. cit. Asymmetrische Schocks und die Zukunft der Europäischen Währungsunion, in: Otto G. Mayer, Hans-Eckart Scharrer, op. cit. Schocks und Schockverarbeitung in der Europäischen Währungsunion (HWWA Institute publications, Vol. 38), Baden-Baden 1997.

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Authors and Affiliations

  1. University of the Federal Armed Forces, Hamburg, Germany

    Henrik Müller & Thomas Straubhaar

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  1. Henrik Müller
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  2. Thomas Straubhaar
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Müller, H., Straubhaar, T. The Euro's place in the world monetary system. Intereconomics 33, 155–163 (1998). https://doi.org/10.1007/BF02929508

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