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September 17, 2007
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Former U.S. Federal Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice.
According to an advance copy of an interview to be published in Thursday's edition of the German magazine Stern, Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn't have all that much of an advantage" anymore.
The euro has been soaring against the U.S. currency in recent weeks, hitting all-time high of $1.3927 last week as the dollar has fallen on turbulent market conditions stemming from the ongoing U.S. subprime crisis. The Fed meets this week and is expected to lower its benchmark interest rate from the current 5.25 percent.
Greenspan said that at the end of 2006, some 25 percent of all currency reserves held by central banks were held in euros, compared to 66 percent for the U.S. dollar.
In terms of being used as a payment for cross-border transactions, the euro is trailing the dollar only slightly with 39 percent to 43 percent.
Greenspan said the European Central Bank has become "a serious factor in the global economy."
He said the increased usage of the euro as a reserve currency has led to a lowering of interest rates in the euro zone, which has "without any doubt contributed to the current economic growth."
Archived from original publication
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Commentary by JR Mooneyham:
Such a development could make for bigger changes in our world than the average American realizes.
America will lose a ton of clout and flexibility once the dollar is no longer the favored reserve currency. Our government would have far less freedom to print money, and problems which are merely tough today could become impossible to fix tomorrow.
This is why Bush-Cheney are wanting to somehow put stricter rules on investors. But it's hard to imagine how they could stem this tide (which they themselves helped mightily to accelerate with their incompetence, greed, and belligerence).
And much good could come of America being humbled this way. For instance, we could be forced to shrink our military spending down to something much more fitting to the modern world. But we average Americans sure won't like the extra suffering it'll entail at street level for a generation or two!
And if we come to feel TOO humiliated and impoverished along the way, we could end up ripe for dictatorship, much as happened to Germany after WWI (paving the way for the rise of Hitler). But don't take my word for it: read the history books!
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We like capitalism, so long as it's between consenting adults.
But we don't think a corporate-state conspiracy à la Wal-Mart is capitalism. That's just smash-mouth economic violence, and it ought to be punished, not encouraged. It ought to be outlawed.
Show us a mom & pop enterprise, people risking their own sweat and effort and equity to build a better widget, serve better spaghetti, or make any honest profit, and we'll be big supporters.
Show us a giant enterprise that has thousands of locations, pretend that corporations have the legal rights of 'people', watch as big business lobbyists write their own legislation and own their legislators — well, that ain't capitalism.
It's fascism, and we're against that sort of thing.
--Helen & Harry Highwater, Unknown News
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