The euro as a reserve currency: Cooperation between P.R. China and Europe

• Autor(a) principal: Godinho, Diogo Manuel Ferreira
• Data de Publicação: 2012
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10071/6307
• topic: Euro; U.S. Dollar; P.R. China; Foreign exchange reserves; International currencies; Dólar Americano; R.P. da China; Reservas monetárias; Moedas internacionais

The weight of the U.S. Dollar and the Euro on world reserves is unquestionable. Both these currencies are the most important currency-faces that represent world economy given their significance in terms of reserves. The U.S. Dollar is, in terms of world economy‟s assets transactions, economy funding and currency representativeness, the most important and dominant international currency. This dominion is real and will not change in the near future regardless of the efforts suggested in this thesis. The Euro is looking forward to challenge the pre-eminence of the U.S. Dollar and has achieved a more solid position as an international currency but it is not enough. The Euro has potential and aptitude to become a reserve currency. However, the Euro has to improve its liquidity, gain visibility, attract foreign investment and fight the recently sharp widening of yield spreads of sovereign debt within the Eurozone first. This thesis suggests a creation of a joint-partnership between Europe and P.R. China in order to allow the Euro to emerge as a reserve currency through the real conception of common Eurobonds. This cooperation would solve existing problems within the Eurozone, carry a more important role for P.R. China as a vital player in world economy and finance and, in the long-term, turn the Euro into a more serious reserve currency on par with the U.S. Dollar.