Question from The International Economy Survey of Experts:
Ten years from now, which will likely be the next great global currency?
My answer:
Contrary to fevered popular speculation in the 1990s, the yen and the mark never had the potential to challenge the dollar as premier international currency: their home economies were smaller than the US and their financial markets less well developed and liquid than New York. The euro, however, is a credible challenger: Euroland is roughly as big as the United States. Indeed, evaluated at the most recent exchange rates, the euro economy has just now surpassed the US economy in size. Also the euro has shown itself a better store of value than the dollar. These are two of the most important determinants of international reserve currency status.