Is the euro the next global currency? How does the current financial crisis affect the relative positions of the dollar and the euro as global currencies?

The Euro at Ten: The Next Global Currency?, based on a major conference held at the Peterson Institute for International Economics in October 2008, answers these questions and provides an assessment of the euro's stability and strength as it stands poised to enter its second decade.

The Euro at Ten presents a fresh, multi-faceted analysis of the euro's ability to supersede the dollar as the currency of choice in international trade and provides insight regarding its future role after enduring the current global financial crisis.

NEWS RELEASE
WASHINGTON—Ten years after its establishment, the euro has been very successful as a stabilizing force for the European economy. Its very existence has helped euro area member economies weather the current global financial and economic crisis, without disruptive competitive devaluations or capital flight.

Before the crisis, the euro provided a boost to financial integration and a reduction in member countries' interest rates, though admittedly no revolutionary improvement in members' economic growth. Skeptics and critics who had argued that the euro would not be a viable currency have been proven wrong. ...

To address the shortcomings of euro area cooperation and crisis response, The Euro at Ten's editors argue for a practical agenda that would also enhance the euro's status as a global currency:

• First, they recommend a long-term consolidation of decision-making in financial matters in the euro area, with greater accountability and flexibility. This decision-making would apply not only to the representation of the euro area at international financial institutions like the International Monetary Fund but also to supervisory and regulatory entities monitoring the health of major financial institutions and the financial system in each euro area member country.
• Second, European policymakers should also move more quickly to define common responses to the current crisis. This applies to banking regulation and supervisions (for example, deposit guarantees and limits on new lending, so as not to further destabilize Eastern European economies) and also to other potential forms of crises affecting countries within the euro area or in its neighborhood.
• Third, the European System of Central Banks, which comprises the European Central Bank and other central banks in the European Union, must provide more aggressive support of the informally euroized and near-euro EU member states, particularly those that have faced difficulties in the current crisis. Among the forms of assistance that should be part of the rescue approach are euro-denominated swap lines and acceptance of noneuro assets for repurchase agreements (or repos), and provision of additional credits to troubled countries.

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Paperback: 248 pages
Publisher: Peterson Institute for International Economics; illustrated edition edition (July 20, 2009)
Language: English
ISBN-10: 0881324302
ISBN-13: 978-0881324303

ABOUT THE EDITORS
Jean Pisani-Ferry is director of Bruegel, the Brussels-based think tank, and professor at Université Paris-Dauphine. He was executive president of the French prime minister's Council of Economic Analysis; senior adviser to the French minister of finance; director of CEPII, the French institute for international economics; and economic adviser with the European Commission.

Pisani-Ferry's research is mainly devoted to European and global economic policy topics. Recent books he coauthored or coedited include Coming of Age: Report on the euro area (2008), An Agenda for a Growing Europe (2004), and Exchange Rate Policies in Emerging Asian Countries (1999).

Adam S. Posen is deputy director of the Peterson Institute for International Economics, where he has been a senior fellow since 1997. A widely cited expert on monetary policy, he has been a visiting scholar at central banks worldwide, including on multiple occasions at the Federal Reserve Board, the European Central Bank, and the Deutsche Bundesbank. In 2006 he was on sabbatical leave from the Peterson Institute as a Houblon-Norman Senior Fellow at the Bank of England. He is a member of the Panel of Economic Advisers to the Congressional Budget Office for 2007–09.

He is the author, co-author or editor of The Future of Monetary Policy (2008), The Euro at Five: Ready for a Global Role? (2005), The Japanese Financial Crisis and its Parallels with U.S. Experience (2000), Inflation Targeting: Lessons from the International Experience (1999), and Restoring Japan's Economic Growth (1998).

ABOUT THE ORGANIZATIONS
The Peter G. Peterson Institute for International Economics is a private, nonprofit, nonpartisan research institution devoted to the study of international economic policy.

Since 1981 the Institute has provided timely and objective analysis of, and concrete solutions to, a wide range of international economic problems. It is one of the very few economics think tanks that are widely regarded as "nonpartisan" by the press and "neutral" by the US Congress, it is cited by the quality media more than any other such institution, and it was recently selected as Top Think Tank in the World in the first comprehensive survey of over 5,000 such institutions.

Support is provided by a wide range of charitable foundations, private corporations, and individual donors, and from earnings on the Institute's publications and capital fund. It celebrated its 25th anniversary in 2006 and adopted its new name at that time, having previously been the Institute for International Economics.

Bruegel is a European think tank dealing with international economics. It was created in Brussels in early 2005 with the intention of bringing a new voice to Europe's economic policy debate.

Bruegel's governance and funding model make it unique, as it is the only think tank partly funded by European Union member states. It is supported by 18 European governments, as well as a number of leading private corporations. Bruegel does not represent any particular policy doctrine.

It aims to contribute to economic policymaking in Europe through open, facts-based, and policy-relevant research, analysis, and discussion. See www.bruegel.org for more information.

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