Suchergebnisse

How will the euro affect transatlantic relations? Even while partners in a political and military alliance, Europe and the United States have long been rivals in monetary affairs. Until recently, however, it was a rather one-sided contest, since Europe had no currency – not even the fabled Deutsche mark (DM) - that could effectively match the U.S. dollar as international money. Now Europe has the euro, which many have predicted will quickly emerge as a potent competitor to America's greenback. Could growing rivalry between the dollar and the euro endanger the historic European-American partnership?

What is America's interest in dollarization? Formal adoption of the dollar by other governments creates both opportunities and risks for the United States, political as well as economic. But few benefits or costs can be estimated in advance, leaving much room for debate and disagreement. The argument of this paper is that no presumption can be established either way, whether for or against dollarization, from a strictly U.S. point of view. Unless directly challenged by efforts elsewhere to establish formal currency blocs, the United States has no interest in promoting a wider role for the greenback.

Few issues of public policy roil Canadians more than the idea of a North American Monetary Union (NAMU), establishing one currency for Canada and the United States. As other contributions to this special issue testify, opinions among Canadians differ sharply and divisions run deep. From the maritimes to the Pacific, Canadians are far from consensus regarding the future of their national money, the much belittled "loonie." But what about opinion south of the longest unguarded border in the world? Largely lost in the din of debate among Canadians is the perspective of the United States, Canada's putative partner. America's interest in NAMU is rarely addressed in any systematic manner. This is surely a critical omission. Even if Canadians could unite in favor of currency union as a policy goal, a vital imperative would remain – namely, the need to gain support from Washington. How would Americans view a monetary initiative from Ottawa? Would the prospect of NAMU be greeted with open arms or with hostility? As a practical matter, a common currency would be impossible without the concurrence, or at least the compliance, of the United States. This essay explores the NAMU issue specifically from a U.S. point of view, addressing both economic and political aspects. The big question is: What does the United States have to gain? The short answer, which will disappoint many Canadians, is: Not much. The U.S. greenback, as the world's leading international currency, already generates considerable benefits for Americans. That is the starting point from which analysis must proceed. As compared with the status quo of America's de facto market dominance, a formal monetary union with Canada, though not without advantages, would threaten more risks and losses for the United States than gains. Moreover, this negative assessment holds true no matter what form NAMU might take – whether modeled on Europe's euro, substituting an entirely new North American money for the continent's two existing dollars; or if instead it were simply to replace the Canada's loonie with the greenback, a "dollarization" model. Either way, under present circumstances, the idea can be expected to elicit little interest among Americans and even less encouragement.

What is America's interest in dollarization? Formal adoption of the dollar by other governments creates both opportunities and risks for the United States, political as well as economic. But few benefits or costs can be estimated in advance, leaving much room for debate and disagreement. The argument of this paper is that no presumption can be established either way, whether for or against dollarization, from a strictly U.S. point of view. Unless directly challenged by efforts elsewhere to establish formal currency blocs, the United States has no interest in promoting a wider role for the greenback.

The aim of this essay is to provide the first building blocks for a positive theory of currency regionalization. In the spirit of the actor-oriented framework outlined by Kahler and Lake (Chapter 1), the analytical focus here is the state–specifically, central decisionmakers responsible for currency policy. The working assumption is that economic globalization is driving policymakers to reconsider their historical preference for strictly national money. The question is: What delegation of authority is most likely to emerge in individual countries? What conditions are most likely to influence the choice among available options? The essay is organized as follows. I begin in the first section with a brief look back at the dramatic transformation of global monetary relations that has occurred in recent decades–a period during which many governments, finding it increasingly difficult to sustain the market position of uncompetitive national currencies, have begun to reflect instead on the possibility of a regional currency of some kind. Section II then highlights the considerable leeway available in designing alternative forms of either currency unification or dollarization, while Section III identifies key factors that can be expected to dominate the calculations of rational policymakers in thinking about the choices before them. Taking all factors into account, it is clear that for many states traditional sovereignty will remain the preferred option. But taking account of possible variations in the degree of regionalization, it is also clear that for many other countries some form of monetary alliance or subordination could turn out to be rather more appealing.

Geopolitics, the dictionary tells us, is about international great-power rivalries – the struggle for dominance among territorially defined states. Conflict is at the heart of geopolitics. Geopolitical relations are dynamic, strategic, and hierarchical. In geopolitics, the meek definitely do not inherit the earth. Today, much the same can be said about currencies, which in recent years have become increasingly competitive on a global scale. Monetary relations, too, have become conflictual and hierarchical; and the meek are similarly disadvantaged. At issue is a breakdown of the neat territorial monopolies that national governments have historically claimed in the management of money, a market-driven process that elsewhere I have described as the deterritorialization of money (Cohen 1998, 2003a). In lieu of monopoly, what we have now is more like oligopoly – a finite number of autonomous suppliers, national governments, all vying ceaselessly to shape and manage demand for their respective currencies. Since state are no longer able to exercise supreme control over the circulation and use of money within their own frontiers, they must instead do what they can to preserve or promote market share. As a result, the population of the monetary universe is becoming ever more stratified, assuming the appearance of a vast Currency Pyramid -- narrow at the top, where the strongest monies dominate; and increasingly broad below, reflecting varying degrees of competitive inferiority.

Can the euro ever challenge the dollar as an international currency? This article argues that Europe's new money is fated to remain a distant second to America's greenback, for four reasons. First is the persistent inertia of monetary behaviour, which will inhibit any rapid switch to the euro. Second is the cost of doing business in euros, which is unlikely to decline below transactions costs for the greenback. Third is an anti-growth bias built into EMU, which will limit returns on euro-denominated assets. And fourth is the ambiguous governance structure of EMU, which sows doubt among prospective euro users. (Journal of Common Market Studies / FUB)