ABSTRACT
When the euro was launched over a decade ago it kicked off an ongoing debate about whether it would challenge the US dollar for global currency supremacy (See, for example Norrlof 2009). The enlargement of the euro area subsequently added a new dimension to the question with debates arising over whether enlargement would strengthen or weaken the possibilities for a larger global role (See Cohen 2007). Now circumstances have changed again with the ongoing effects of the global financial crisis bringing sharply into focus the future of international currencies. In the immediate aftermath of the crisis, the US dollar became a safe haven with investors pushing up the value of the dollar despite the fact that the US was the epicenter of the crisis. Since then, however, the future prospects for the US dollar as the key international currency have been increasingly questioned as the fiscal stimulus announced in the US is seen as inevitably leading to a long run depreciation of the dollar and an accompanying loss in its attractiveness for its holders. This seemed to bode well for an increased role for the euro as an international currency. However, the sovereign debt crisis that has engulfed Greece has now not only weakened the euro but even brought into question the continued existence of the eurozone.
