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Currency power configurations are never static. They evolve along predictable lines with the growth and decline of nations. Looking at the international monetary system as a constantly-evolving oligopoly, it seems inevitable that a countervailing power would develop to challenge the dollar. Now, at the close of the "American century," the euro has appeared as a potential rival, the countervailing power, to the dollar.
The advent of the euro may turn out to be the most important development in international monetary arrangements since the emergence of the dollar as the dominant currency shortly after the creation of the US central bank, the Federal Reserve System, in 1913.
When the euro was created it instantly became the second most important currency in the world. In ten years, therefore, there could be as many as 28 member countries in the European Union. In addition, thirteen CFA franc countries in West and Central Africa, since 1946 tied to the French franc, are also tied to this euro area. If, as seems plausible, a few countries in North Africa and the Middle East also choose to fix their currencies to the euro, the euro area could eazsily contain as many as 50 countries with a population exceeding 500 million and a GDP substantially larger than the United States within a decade.
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“We will no longer think of a dollar-dominated international monetary arrangement but one in which the power is shared by the dollar, euro and yen areas, with a residual amount of power held by the IMF representing the other countries."
RAM
"This is in my view a great step forward, because it will bring forth new and for once meaningful ideas about reform of the international financial architecture. The euro promises to be a catalyst for international monetary reform.”
RAM
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