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Frenkel, Michael
Søndergaard, Jens
Year of Publication: 
Series/Report no.: 
Research Notes 99-5
Since EMU represents a currency area with a GDP level and a world market share comparable to the United States, it is widely expected that the euro will become an important international currency. This paper suggests simple methods how to quantify the effects that EMU may exert on the roles of the dollar and the yen as the other major international currencies. Estimates presented indicate that the euro may indeed lead to a significant decline in the market share of the dollar as an official reserve currency of central banks and as an investment currency of private portfolios. These effects hinge on the assumption that the euro will achieve a reputation similar to that of the deutschmark before EMU. The projected shifts can be expected to materialize only in the medium term so that no immediate abrupt changes in the demand for dollars will occur.
International Economic Integration
Long-Term Capital Movements
Financial Aspects of Economic Integration
Document Type: 
Working Paper
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