Euro as reserve currency

July 24th, 2017 at 4:48:38 PM permalink
Pacomartin
Member since: Oct 24, 2012
Threads: 735
Posts: 8571
In the 1990s one of the driving forces behind creating the Euro was to have an alternative reserve currency to the USD. Although the European currencies (in particular the German Mark) were used as reserve currencies, the level of use was very low.

In the year 2000 the 12 nations of the Euro zone held the equivalent of 380 billion Euros in banknotes national currencies. The exchange rate was fixed to the Euro three years before the physical banknotes and coins were released. In comparison the Fed was circulating over 500 billion in USD in banknotes.

In 2006 after four years of the physical currency it became big news when the Euro Zone floated more banknotes and coins by value than the USA (expressed in USD at current exchange rates). At the peak in 2009 there was almost 30% more Euros in circulation than USD. After 2009 the ECB lost it's push to increase Euros and over the next four years the market capitalization slipped back under the USD.


Euro/USD Year USA Euro area
-13.4% 2005 $793.99 $687.37
+03.9% 2006 $820.14 $852.15
+23.8% 2007 $828.91 $1,026.07
+22.7% 2008 $889.89 $1,092.01
+28.7% 2009 $928.23 $1,194.66<- |
+17.4% 2010 $982.72 $1,154.10 |
+09.9% 2011 $1,075.79 $1,182.14 |
+05.9% 2012 $1,169.13 $1,237.83 |
+09.2% 2013 $1,241.16 $1,354.86 |
-05.6% 2014 $1,342.88 $1,267.29 |
-15.1% 2015 $1,424.92 $1,210.42<- |


From 2009 to 2015
the USD banknotes and coins increased by 53.5%
the Euro banknotes and coins increased by 34.0% in Euros, but only by 1.3% when converted to USD at current exchange rates.

Do you think this trend will reverse again, or is the Euro going to keep slipping in importance?
July 24th, 2017 at 5:01:12 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 103
Posts: 6772
Quote: Pacomartin

Do you think this trend will reverse again, or is the Euro going to keep slipping in importance?


To really be a reserve currency the country must accept trade deficits forever. No other way to get others to use your currency. I don't see Germany allowing this.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
July 27th, 2017 at 11:32:01 AM permalink
petroglyph
Member since: Aug 3, 2014
Threads: 12
Posts: 2119
Quote: Pacomartin
Do you think this trend will reverse again, or is the Euro going to keep slipping in importance?
I don't believe the EU can survive when they have laws that force this mass immigration? http://www.zerohedge.com/news/2017-07-26/eu-force-poland-hungary-and-czech-republic-accept-refugees
Everyone gets thrown from the plane to maintain altitude