Can the Euro Compete with the US Dollar?: The View from the BRICs (ARI) |
Theme: As things now stand, for the BRIC countries (Brazil, Russia, India and China) the euro poses no threat to the US dollar from a material standpoint. However, as far as ideas are concerned, there has in fact been a change in the status quo of the international monetary system.Summary: This ARI is a summary of a study focused on how the financial elite in Brazil and China perceive the rivalry between the US dollar and the euro in their battle to be the international system’s dominant currency. The more than 40 interviews carried out show that these financial leaders are unhappy with the dollar but also feel that for now the euro is no rival to the greenback, mainly because there is no integrated market for European public debt. For this reason, the material impact of the euro in Brazil and China has been limited. But its influence in the realm of ideas has been considerable. The Brazilian and Chinese financial elite see the European Monetary Union as a model to emulate in their respective regions. The single European currency has shown these leaders that monetary regionalization and even globalization is possible and, inadvertently, the euro has touched off a race to win over geo-monetary space outside the dollar’s sphere of influence. In this race, the Europeans have started with a certain advantage from the outset but if they do not join forces, they might soon be left behind.Analysis:Introduction
Since its creation and consolidation as an international currency, the euro has triggered extensive academic debate on its potential for unseating the US dollar as the anchor of the world economy. The analyses vary greatly, and for now there is no clear consensus. Research focuses on the strengths and weaknesses of the two monetary zones and because of this it reaches disparate conclusions. However, where there is homogeneity is in the point of view. Almost all of the research centres on... [continues]
Theme: As things now stand, for the BRIC countries (Brazil, Russia, India and China) the euro poses no threat to the US dollar from a material standpoint. However, as far as ideas are concerned, there has in fact been a change in the status quo of the international monetary system.Summary: This ARI is a summary of a study focused on how the financial elite in Brazil and China perceive the rivalry between the US dollar and the euro in their battle to be the international system’s dominant currency. The more than 40 interviews carried out show that these financial leaders are unhappy with the dollar but also feel that for now the euro is no rival to the greenback, mainly because there is no integrated market for European public debt. For this reason, the material impact of the euro in Brazil and China has been limited. But its influence in the realm of ideas has been considerable. The Brazilian and Chinese financial elite see the European Monetary Union as a model to emulate in their respective regions. The single European currency has shown these leaders that monetary regionalization and even globalization is possible and, inadvertently, the euro has touched off a race to win over geo-monetary space outside the dollar’s sphere of influence. In this race, the Europeans have started with a certain advantage from the outset but if they do not join forces, they might soon be left behind.Analysis:Introduction
Since its creation and consolidation as an international currency, the euro has triggered extensive academic debate on its potential for unseating the US dollar as the anchor of the world economy. The analyses vary greatly, and for now there is no clear consensus. Research focuses on the strengths and weaknesses of the two monetary zones and because of this it reaches disparate conclusions. However, where there is homogeneity is in the point of view. Almost all of the research centres on... [continues]
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