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25 years ago they said this about the yen.

10 years ago the Euro was going to take over the world.

Now the yuan is the enemy even though people still flock to the dollar even with interest rates near 0%.



Don't count out the Euro just yet! From Wikipedia reserve currencies: - 1999: USD 71.0%, Eur 17.9% - 2012: USD 62.2%, Eur 25.0%

Sure the next 5-10 years might be worse for the Euro, but for things like a global reserve currency one should think in 50+ year frames anyway...


The basis of the Euro is on a multi-state entity with closed books and little regulation. This basically means the liability of any single country can impact the whole of the EU and by extension the Euro. Until the EU makes a part of membership, approval oversight on all member country budgets, the stability of the Euro is a bit fractured. (Getting oversight is something the countries generally refuse on the non-incorrect grounds of state independence, but then why join a combined currency in the first place? UK got it sorta correct)

And for clarity, the reason I see the multi-state being an issue is, it is slow to act to resolve issues or expose issues, since resolving issues takes a combined intent and single states have little incentive to keep their books correct publicly (plenty of upside, little downside).

While I don't see the dollar being the world currency forever, I also don't see it needs to be.


Not disagreeing...

but "...with interest rates near 0%...", one would expect a great deal of activity in dollars.


No, money normally moves into countries with higher interest rates (ie their currency is purchased), all things being equal. But of course all things are not equal.


The USD is backed by a lot of guns. Noone else has comparable power to beat down anyone who threatens their currency.


The difference is that the central banks backing the Euro and the Yen have not had an aggressive currency policy.




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