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The euro’s global role: past, present and future

Author(s): Arnaud Mehl

Date published: Sep 2019

SUERF Policy Note, Issue No 99
by Arnaud Mehl, European Central Bank

JEL-codes: F3.
Keywords: International role of the euro, dominant currency pricing, global monetary policy spillovers, geopolitics.

The creation of the euro 20 years ago aimed primarily to address Europe’s own internal challenges. However, some of the euro’s founding fathers had external ambitions in mind, too. They saw the euro as an opportunity to create a currency with a strong global footing. This paper sketches briefly the salient developments in the euro’s international role since its creation twenty years ago. It also assesses progress made since 1999 in our empirical and conceptual understanding as to why international currency status matters in the first place. In particular, the paper shows that we now better understand that international currency issuers enjoy greater monetary autonomy, that international currency status strengthens the global transmission of monetary policy, and that geopolitics is one determinant of the global appeal of a currency. The paper concludes by providing insights into the currency’s prospects as an international unit, in light of some lessons that can be gleaned from history.

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SUERF Policy Note, Issue No 99SUERF Policy Note, Issue No 99

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