Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78096
Authors: 
Detken, Carsten
Hartmann, Philipp
Year of Publication: 
2000
Series/Report no.: 
CFS Working Paper 2000/09
Abstract: 
This paper provides a broad empirical examination of the major currencies' roles in international capital markets, with a special emphasis on the first year of the euro. A contribution is made as to how to measure these roles, both for international financing as well as for international investment. The times series collected for these measures allow for the identification of changes in the role of the euro during 1999 compared to the aggregate of euro predecessor currencies, net of intra -euro area assets/liabilities, before stage 3 of EMU. A number of key factors determining the currency distribution of international portfolio investments, such as relative market liquidity and relative risk characteristics of assets, are also examined empirically. It turns out that for almost all important market segments for which data are available, the euro immediately became the second most widely used currency for international financing and investment. For the flow of international bond and note issuance it experienced significant growth in 1999 even slightly overtaking the US dollar in the second half of the year. The euro's international investment role appears more static though, since most of the early external asset supply in euro is actually absorbed by euro area residents.
Subjects: 
international capital markets
international currencies
euro
dollar
yen
EMU
capital flows
international monetary system
portfolio selec
JEL: 
G15
F32
G11
F21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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