The Us Dollar, the Euro, and the Yen : An Evaluation of Their Present and Future Status as International Currencies

The paper evaluates the present and future international currency status of the US dollar, the euro and the yen. In section two the functions, benefits, and costs of a leading international currency are discussed. In section three key determinants for the continuous dominance of the US dollar are analysed in order to assess the sustainability of this regime. Since it turns out that highly developed financial markets are of special importance section four takes a closer look at the integration of European financial markets emphasizing the enormous structural changes that came about since the euro has been established in 1999. The comparatively weak international status of the yen, currently ranked third, is briefly sketched in section five. In the last section we sum up our findings by trying to assess how the future currency regime most probably will look like