Analysis Of Euro's Status In The International Monetary System

The study of euro is of profound theoretical and practical significance. By far, Euro and the European Monetary Union is the largest and broadest practice of monetary integration theory. This provides a good opportunity to verify many old theories of the Euro. At the beginning of this paper, author lists the present condition of the euro study madding by domestic and overseas scholars. Most of them focused on whether the economic conditions are suitable for euro, the birth of the euro, exchange rate fluctuations of the euro, and so on.The birth of any currency is unlikely to happen overnight. It needs some certain foundation and preconditions. So this paper gives a description of the theoretical foundation and historical background. The birth of euro involves many theories. But it is not enough to own the theoretical possibility. The development of economic and cultural history is also essential to the birth of the euro.This paper contributes a large proportion to elaborating the prominent position of euro in the international monetary system. Euro is a freshman in the international monetary system. The birth of it influenced the international monetary system and international financial market seriously. The study of Euro is not only related to international currency, but also concerned with international finance. So the study of Euro is very broad, and it is meaningful to study Euro. Foreign exchange market, bond market and stock market are three main markets of the international financial market. This paper follows the above sequence in the discussion. This paper has independent chapters describing the impact of Euro on the international monetary system in three ways. That includes the international money market, the international exchange rate system and international reserve currency system. This indicates the importance of the international status of Euro indirectly. In the last chapter, by comparing with dollar, Euro has strength to challenge dollars. The euro is even likely to challenge the leadership of dollar. But, it needs some time to replace dollar. Finally, the paper predicts the future development tendency of Euro is upward, although the current financial crisis and the debt crisis have an effect on Euro. The development of Euro directly impacts the economic and financial relations between the European Union and our country. The currency options in our international lending activities, settlement of international trade and foreign exchange reserve, is closely bound up with exchange rate fluctuations of Euro which is closely related to the development of Euro. So it is of practical use to study Euro.