8 replies to this topic

[TTHQ Staff]

Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice. He said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn't have all that much of an advantage" anymore.

The euro has been soaring against the U.S. currency in recent weeks, hitting all-time high of $1.3927 last week as the dollar has fallen on turbulent market conditions stemming from the ongoing U.S. subprime crisis. The Fed meets this week and is expected to lower its benchmark interest rate from the current 5.25 percent.

Greenspan said that at the end of 2006, some 25 percent of all currency reserves held by central banks were held in euros, compared to 66 percent for the U.S. dollar.

In terms of being used as a payment for cross-border transactions, the euro is trailing the dollar only slightly with 39 percent to 43 percent.

Greenspan said the European Central Bank has become "a serious factor in the global economy."

He said the increased usage of the euro as a reserve currency has led to a lowering of interest rates in the euro zone, which has "without any doubt contributed to the current economic growth."

[calmcookie]

My brother has always been economically savvy. Now I know why he moved, last year, from the U.S. to Belguim. I can't see any significant factors that are going to bolster the U.S. dollar ... but would be interested in knowing whether others see legitimate reasons for a recovery (rise). Best to all, C.C.

Edited by calmcookie, 17 September 2007 - 09:55 AM.

[humble1]

the regurgitations and shameful self promoting rewritings of history by this once respected and powerful man are really a shock to many of us who consider ourselves as serious observers. i could never have imagined something so disruptive, all to make a few sheckles.

[phineas_gage]

It already has replaced the dollar. The Dollar's status has always been a function of the middle east's use of the dollar as the international unit for oil trade. That broke down in '99. Shrub's failure to intimidate the rest of the OPEC; the willingness of producers like Iran, Venezuela, Russia, and Indonesia to accept Euro and Asian Bloc currencies; the emergence of China as the world industrial growth superpower; and higher real interest rates in the Euro have long since tempered the enthusiam for international wealth to hold the dollar. Without oil as a crutch, the Dollar has to trade on fundamentals, which ain't that hot really... Old news, IMHO.

[mss]

the regurgitations and shameful self promoting rewritings of history by this once respected and powerful man are really a shock to many of us who consider ourselves as serious observers.

i could never have imagined something so disruptive, all to make a few sheckles.

"....once respected ".............."and still powerful"
The danger here is that the price of oil might be bench marked to the Euro. This is what Saddam was going to try and do. This would send our cost of oil out the roof, but the price of gold would reach the tauted $8500 mark.
mss

Edited by mss, 17 September 2007 - 10:15 AM.

[youmast]

Year 2002

SPX 850
Euro 0.85

Year 2007

SPX 1400
Euro 1.40

Who moved my cheese?

[johngeorge]

IMO the US is not going to allow the dollar to be replaced by the Euro as the currency of the realm. At this time the US has the military might as well as the financial muscle to insist the dollar remain king. When that changes so will the world's reserve currency. Could be a long time a coming. Meanwhile dont be surprised if you see a higher dollar next Spring.

[youmast]

Yeah, the first guy who tried to replace US Dollar was the best American friend. We know what happened to him. Of course he was a bad guy. Now we've got better government in Iraq, right? Is anybody esle against "democracy"?

[darnelds]

Did he say "cut the cheese"?