The Euro and Developing Country Finance

34 Pages Posted: 14 Dec 2006

See all articles by Paul R. Masson

Paul R. Masson

affiliation not provided to SSRN

Abstract

More than six years after the introduction of the euro, impacts on developing countries have been relatively modest. Overall, the euro has become much more important in debt issuance than in official foreign exchange reserve holdings. The former has benefited from the creation of a large set of investors for which the euro is the home currency, while demand for euro reserves has been held back by the dominance of the dollar as a vehicle and intervention currency, and the greater liquidity of the market for US treasury securities. Fears of dollar decline may fuel some shifts out of dollars into euros, however, with the potential for a period of financial instability.

Suggested Citation

Masson, Paul R., The Euro and Developing Country Finance. Rotman School of Management Working Paper No. 06-07, Available at SSRN: https://ssrn.com/abstract=951743 or http://dx.doi.org/10.2139/ssrn.951743

Paul R. Masson (Contact Author)

affiliation not provided to SSRN

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