Money Talks…

This article is about “10 year history of euro vs. dollar”, we hope to bring more articles about “10 year history of euro vs. dollar” in the near future:

After WWII, an agreement in 1944 created the Bretton Woods System. Under this financial system, all other currencies were pegged with US Dollar, which was linked to gold at the rate of $35 per ounce. Thus US Dollar became the key currency of the world. At that time, Dollar could not be over issued like today, because it was backed up by gold, and was thought to be as good as gold.

In 1970, the gold coverage of paper US Dollar dropped from 55% to 22%, because the US printed more Dollars to pay back its trade deficits. Foreign countries, such as Switzerland and France, lost faith in Dollar and began to trade their Dollar reserve into gold from the US. In order to stabilize the economy, President Nixon canceled the Bretton Woods System in 1971. After that, Dollar can no longer be convertible to gold directly.

In the following 30 years, after the collapse of fixed exchange rate under Bretton Woods System, most major countries in the world adopted floating exchange rates. But most international transactions are still dominated in Dollars; this maintains US Dollar as the De Facto world currency. The difference is that the circulation of Dollar is no longer restricted by the gold reserve. Comparing the price of gold at about 910 Dollars per ounce today, you can get a rough picture of it.

Post Dollar Era

As worried about Fed printing loads of money to respond the crisis, which may hurt China’s Dollar reserve, China realizes it can not rely too much on Dollar in the future. So China suggested substituting US Dollar with IMF’s Special Drawing Rights (SDRs) as the world’s single reserve currency in the future. SDRs, also called “paper gold”, were first created in 1969 as a tool to enhance the liquidity through replacing gold and silver in international transaction. The value of SDRs is determined by a basket of currencies include Dollar, Euro, Yen and Sterling. Although Dollar is still the key currency in this basket, its weight declined to 44 percent. In this way, other countries may be in a better place to defense their currency reserve when the key country suffers a bad time.

Whose Cheese Gets Moved?

See who said no. “I don’t believe that there is a need for a global currency. The dollar is extraordinarily strong right now”-this is Obama’s response to the proposal. There is no reason for the US to give up the Dollar’s reserve currency status right now. “Diluting Chinese savings to bail out America’s failing banks and bankrupt households, though highly beneficial to the US national interest in the short term, will destroy the dollar’s global status.”(Andy Xie, Financial Times May 4 2009) It is true, but only true in a long run.

It took over 10 years for Dollar overtaking Sterling as the world’s reserve currency after the US surpassed the UK in economy. It also took 15 years for Euro to be adopted after Euro Currency Unit first came to exist. It may take a long time for countries to recognize the SDRs. Before that, the SDRs should be further improved and perfected by IMF. However, don’t overlook that every major issue must get 85% votes in IMF, where the US owns 17% alone-enough a veto over every proposal. So, there is a still a long way to go. Even Governor Zhou Xiao chuan said, “It is a long term issue.”

Holly Pressman Financialiteracy.com LLC LTD LIAB CO DELAWARE 527 Bellvue Place Alexandria VIRGINIA 22314 203-912-9693 http://www.financialiteracy.com Article Source: http://EzineArticles.com/?expert=Holly_Pressman

This post was mainly about 10 year history of euro vs. dollar, you are welcomed to comment here about 10 year history of euro vs. dollar.

Your PC might be slow or have lots of errors like the blue screen or other Computer errors, you can call a technician to fix or repair your PC or you can use the best registry cleaner software that will fix your PC registry and will make your computer or laptop work faster and with no errors.
People got here while searching: dollar vs. euro 10 year history - 10 year history euro dollar exchange - history of euro versus dolar - sterling to us dollar 10 year history - dollar euro history year - us dollar vs. basket 10yr - 10 year history of Euro to Dollar exchange rate - dollar euro 10 year history - year history for euro - 10 years us dollar vs euro history - euro v dollar 10 year history - euro dollar conversion history 10 year - euro dollar 10 year history - 10 year history of euro - euro 10 year history - euro versus sterling history - us dollar to euro history one year - dollar vs euro in 10 years - 10 years history exchange rate of france - euro vs dollar history 10 year history.