The Euro :: Essays Papers

The EuroIn Europe, the debut of the euro is widely hailed as the most important event affecting the international monetary beautify since the breakup of the Bretton Woods System in 1971 to 1973, or since the Bretton Woods stipulation in 1944, or maybe even since the founding of the Federal harbour System in 1913. It has become a contest for European officials and commentators to catch up with who can push the analogy back furthest in time. Eminences elsewhere in the world have similarly greeted the euro with high hopes and great expectations. unaccompanied in the linked States has the euro been greeted with a yawn. It is not hard to see why. So far, its advent has not weakened the international financial position of the long horse if anything the opposite has been true. The dollar has been strong against the euro rather than weak for oft of croak autumn the fear was that the euro, which had started out being worth well to a greater extent than a dollar, might plunge through the dreaded psychological hindrance of one to one. There has been no sign of Asian and Latin American central banks replacing their dollars with euros en masse, as prominent commentators had predicted. The United States has not had to change the way it does business at Group of Seven summits, the OECD, or the IMF. Many Americans thus cannot help but feel that the euro is a tempest in a teapot. The Euros Slow Start Perhaps Asian and Latin American central banks have been waiting to dump their dollars until the euro stabilizes. Through much of 1999 the euro was weak because the European economy was weak governments and private investors were understandably averse to overweight a currency that seemed to be losing value by the day. Investors were reluctant 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 because European banks had change much more aggressively th an their American counterparts to Indonesia, Korea, Malaysia and Thailand. But now that European growth is finally accelerating, the euro could strengthen, and the anticipated shift into euros at last could take a shit under way.Perhaps governments and investors have been reluctant to embrace the euro because of a serial publication of missteps by the European Central Bank. In the early months of 1999, ECB officials issued a series of confusing and contradictory statements, and on several occasions the ECB boards decision on whether or not to raise interest rates leaked to the press in advance of the official announcement.