The Euro :: Essays Papers

The EuroIn Europe, the debut of the euro is widely hailed as the most important event affecting the international monetary embellish since the breakup of the Bretton Woods strategy in 1971 to 1973, or since the Bretton Woods Agreement in 1944, or maybe even since the founding of the Federal Reserve System in 1913. It has become a contest for European officials and commentators to see who can push the analogy back furthest in time. Eminences elsewhere in the initiation have similarly greeted the euro with high hopes and great expectations. Only in the United States has the euro been greeted with a yawn. It is not hard to see why. So far, its advent has not belittled the international financial position of the dollar if anything the opposite has been true. The dollar has been strong against the euro rather than weak for much of last autumn the fear was that the euro, which had started out macrocosm worth well more than a dollar, might plunge through the dreaded psychological barri er of one to one. There has been no sign of Asiatic 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 septenary 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 reluctant to gravid a currency that seemed to be losing value by the day. Investors were slow to move into euros because they thought that Europe was less well prepared than the United States for Y2K. They worried some the stability of the European banking system because European banks had lent much more aggressively than their American counterparts to Ind onesia, Korea, Malaysia and Thailand. But now that European growth is finally accelerating, the euro could strengthen, and the judge shift into euros at last could get under way.Perhaps governments and investors have been reluctant to embrace the euro because of a series 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 evaluate leaked to the press in advance of the official announcement.