“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.”
Robert Mundell
“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.”
Robert Mundell
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Needless to say, Mundell’s analysis has also attracted attention in connection with the common European currency. Researchers who have examined the economic advantages and disadvantages of EMU have adopted the idea of an optimum currency area as an obvious starting point.
Nobel Prize Press Release
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.
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. |
