Reservations about euro-denominated reserves?
WASHINGTON — This is far from my area of expertise, but I found it interesting that the FT is reporting that the dollar, widely used as the currency of international commerce and reserve holdings, should withstand a challenge by the euro to displace it in that role despite the euro’s steep appreciation against the dollar.
Having just returned from Cambodia, where U.S. dollars are accepted as an unofficial official currency (ATMs often dispense dollars over Cambodian riel.), I find it an interesting parlor game of what would happen if countries that use dollars in local and international commerce dumped dollars in favor of euros. Would this change happen gradually? Suddenly? What would happen to the value of the dollar vis a vis the euro?
Notably in Europe, places like Montenegro and Kosovo have adopted the euro as an unofficial official currency. It’s understandable since a lot of foreign aid and even tourist money is coming from other parts of Europe. Dollars just wouldn’t make sense.
January 15th, 2008 at 11:53 am
[...] — Once again, this is far from my expertise, but it’s very interesting to see a New York Times blog post about a few stores in New York [...]