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Why the euro is a long way from challenging the dollar's dominance

Section: Daily Dispatches

By Matthew Lynn
The Telegraph, London
Monday, June 13, 2016

The phrase is sometimes attributed to the post-war French President General De Gaulle, but in fact it was coined by his then-finance minister, and later successor at the Elysee Palace, Valery Giscard D'Estaing.

In 1968, in the midst of a campaign by his leader against role of the dollar in the global monetary system, Giscard came up with the term "exorbitant privilege" to describe the special status the American currency has long held in the world economy.

When the euro was created a couple of decades later, one of the implicit goals, at least to the French, was to challenge that. A single European currency would be big enough and strong enough to take on the mighty greenback, and eventually even topple it from its throne.

It hasn't happened. According to the latest calculations from the European Central Bank, the euro is not making any progress against the dollar at all.

Instead, its share of global currency reserves is declining steadily every year. Extraordinarily, on some measures, it is now even less important than the old German Deutschmark used to be all by itself -- in effect, the other 18 national currencies have been turned into nothing. ...

... For the remainder of the report:


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