The Effects of Emu on the Dollar and the Yen as International Currencies

International Journal of Business, Vol. 3, No. 1, 1998

Posted: 7 Apr 1998

See all articles by Michael Frenkel

Michael Frenkel

WHU Otto Beisheim Graduate School of Management

Jens Sondergaard

Capital Group International, Inc. - London Office

Abstract

This paper estimates demand functions for international reserves and projects the effects of EMU on the level and the composition of international reserves both of the European Central Bank and of non-EMU central banks. Furthermore, this paper investigates possible shifts in the currency composition of international bonds and bank deposits in private portfolios. Using different scenarios for the ultimate country composition of EMU, the analysis points to a sizable reduction in the level of international reserves in EMU and to a reduction in the demand for dollar assets both within and outside EMU. However, these changes require a high degree of price stability within the EMU and are expected to take place only gradually so that no immediate drastic effect on international financial markets may result from these shifts.

JEL Classification: F31, F36

Suggested Citation

Frenkel, Michael and S√łndergaard, Jens, The Effects of Emu on the Dollar and the Yen as International Currencies. International Journal of Business, Vol. 3, No. 1, 1998. Available at SSRN: https://ssrn.com/abstract=73379

Michael Frenkel (Contact Author)

WHU Otto Beisheim Graduate School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany
0049 261 6509281 (Phone)
0049 261 6509279 (Fax)

Jens S√łndergaard

Capital Group International, Inc. - London Office ( email )

40 Grosvenor Place
London, England SW1X 7GG
United Kingdom

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