Since the French government decried the “exorbitant privilege” of the US in issuing the international reserve currency and alleged its misuse of this power in the 1960s (Eichengreen 2011), the potential benefits and prospects of Europe taking over such a role have figured among the most important implications of European monetary cooperation. While it would entail both economic and political costs, the gains could be substantial. This chapter evaluates the international role of the euro. It first reviews the status of the euro as an international currency and how it fares compared to the international reserve currency, the US dollar. The chapter then considers the rise of the Chinese renminbi and how this impacts the euro. It continues with the euro’s external representation, including its exchange rate and the participation of the euro in the IMF (the G20, Bank for International Settlements and the Financial Stability Board are covered in Chapter 4). The final section considers the desirability of the ascendance of the euro.
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