Euro:The adversary of US dollar
Objective French monetary secretary Dominique Strauss-Kahn says, "We will no longer yield to the domination of the US dollars" French president Chirac also said” Euro will resume their doyen age “
Closer look of Euro • “E” for Europe • The parallel lines connote the stability of Euro.
Birth of Euro • The first blueprint of this idea was made in December 1969 • The euro was introduced to world financial markets in 1999 (invisible currency) • launched as a currency in 2002
The meaning of Euro • Euro can increase the honor of the currencies of the EU members. • Euro can increase the stability of member financial environment
The meaning of Euro • Increase the nationality of Europe. • Euro improves the co-operation among countries.
Eurozone • also called Euro Area, Eurosystem or Euroland • is the subset of European Union member states which have adopted the euro
Current Eurozone • The 12 Eurozone:Austria, Belgium, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain. • have the right in the printing, minting and distribution of notes and coins
Non Eurozone of EU • Denmark, Sweden, the United Kingdom, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia
The ten new Euro-zonemembers
Question 1. • What is the meaning of the sign of Euro?
Answer no 1. • “E” for Europe • The parallel lines connote the stability of Euro.
Benefit of single currency • Removal of exchange rate risk • Removal of conversion fees • Deeper financial markets
Price parity • Competitive funding • Macroeconomic stability
Cons of single currency • Less-specific monetary policy
EuroVs USD
THE EURO AS AN INTERNATIONAL CURRENCY • store of value • medium of exchange • unit of account
The Euro as a store of value In 2005 international debt securities market (money market instruments, bills and bonds): Net issues denominated with Euro: USD939 billion With USD: USD267.8 billion →Euro 3.5times higher than USD
The Euro as a store of value
The Euro as a medium of exchange
The Euro as a unit of account • Is the basis for its use as a store of value and as a medium of exchange • Euro’s role as unit of account is increasing • because of the widespread use of the USD as a payment and vehicle currency in international trade. → Euro’s role is comparatively less significant
For instance:Venezuela and Iraq, who has been using USD as a payment has also changed to use Euro when trading a certain goods, eg. oil
Question 2 • How many members of the Eurozone at 1 Janunary 1999?
Answer no 2 • 11 countries: Austria, Belgium, France, Finland, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain • Greece started to use Euro at 1Janunary 2002
Official Use
Currency Peg • stability of the currency chosen • trade and financial links
Reserves • it functions as a store of value • hold for payment • finance foreign debts
About the Table • elimination of the reserve status of the European Union currencies. • US dollar keeps stable at about 65% • the euro has increased from 17.9% to 24.9% • The market share of US dollar is about three times more than euro
Similar Economic System • becomes a large economic and trading unit • highly liquidity and deeper capital and financial market • keep the price and inflation stable and then the value of the currency
What is the reason of keeping foreign reserve? Question 3.
Answer no 3 • it functions as a store of value • hold for payment • finance foreign debts
Most commodities are priced in USD • GDP of the Euro area $8419 billion the United States $11,650 billion • Euro:30.66% of the total world export USD:10% of the total world export
Can Euro replace US dollar? • Short term-----No. • Mid-term-----US dollar and Euro share about 80% to 90% of the world equally. • Long term-----Yes.
LAST Question!!!! • This question is cooperated with the chance of the EXTRA LARGE GIFT !! • What is the exchange of Euro to HKD today? (hins: should be HK$9.0~9.9/ Euro)
Answer • HK$9.6520/Euro(updated at 27/4 3:00am) (alternative HK$9.5~9.7) or • Euro0.1036/ HK$ (alternative 0.100~0.105)
The End
