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Chapter 12. Trends and the Yuan > The Euro: Can It Hold?

The Euro: Can It Hold?

Since its physical launch in 2002 (although it was available electronically for years before that), the euro has emerged as a powerful counterweight to the U.S. dollar. As many of its architects hoped, it is unseating the U.S. dollar's supremacy in world currency markets. The U.S. dollar suffered larger reverses against the euro in 2004. If central banks outside the U.S. begin exchanging their reserves of dollars for euros, the U.S. dollar may experience an even more drastic decline.

The euro, however, will face enormous pressures over the long run that may lead to its undoing. This is a complicated scenario, but here are some possible outcomes.


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