2002-05-31 After carefully thinking about your conclusion, I'm going to disagree. You are assuming that the dollar will remain at 80 % and the Euro will only replace the present usage for the Mark, the Franc and the Pound Sterling. I expect that 80 % to dwindle, for the following reasons:
1.) Previous to 2002-01-01 within the Euro-zone, the Euro was only an electronic currency, used only by the European Borses, holding the currencies tied to the Euro together, and in a few places as secondary indicators of pricing in some shops. The common people and the businesses still conducted their business in the local curriencies. Nothing changed in this respect. I'll bet in all cases, that when a business in France traded with a businees in Italy, and a business in Italy traded with one in Holland and Holland with Greece and Greece with Germany, etc., they settled their accounts in dollars. The reason being is that most banks, if not all, allowed their customers to hold dollar accounts, thus making it easy to pay for products sold outside their home countries. The Euro changed all of that. Businesses within Europe no longer have an incentive to maintain those Dollar accounts or to use them to pay for accounts with other Euro-zone countries. The banks don't pay the interest on Dollar accounts as they do national currency accounts and often charge fees to maintain them. They are worth it, if there is a need. But, for inter-EU payments, the dollar usage is not advantageous or needed. Thus the holdings in these accounts can be reduced or the accounts closed altogether. Those customers that did not maintain Dollar accounts, but purchased dollars to be used to pay bills had to pay a 2 to 3 % transaction fee. It is foolish for Euro-zone companies to pay other Euro-zone in Dollars and then to convert back to Euros again. This will incur a double fee. Thus any Euro-zone transactions formorly in Dollars that are now in Euros must be deducted from the 80 %. 2.) Countries not in the Euro-zone but heavily associated with the Euro-zone will use Euros when the previous used Dollars when trading in the Euro-zone. These countries would be Denmark (which could include Greenland and Iceland). the UK, Norway, Sweden, Switzerland, the former Soviet Satellite states, former colonies of Euro-zone countries, etc. These would not do all their payments in Euros, but some or most. This would be a further erosion of that 80 %. 3.) Rest of the world. Countries not included in the 1.) and 2.) above, but who trade heavily with the Euro-zone and are dependant heavily on the Euro-zone for trade may also do part of their payments in the Euros. A yet further erosion of that 80 % The Euro has been increasing in value these past few weeks and is near 94 US cents. It is expected to reach parity by years end and be about 1.10 $US in a years time. (FRom USA Today). The exact amount of power the Euro will take from the Dollar is unknown, but rest assured what ever it is, it will have a negative effect on the US economy. John ----- Original Message ----- From: "M R" <[EMAIL PROTECTED]> To: "U.S. Metric Association" <[EMAIL PROTECTED]> Sent: Monday, 2002-05-27 13:13 Subject: [USMA:20247] Fwd: 'Euro-creep' starts slowly > Hi John > > Before 2002-01-01, this was the status of currencies > in interbank transactions. > > US Dollar : 80 % > Deutshce Mark : 10 % > The other currencies had the remaining 10 %. > I guess that > Japanese yen had 5 % > French Franc had 2 % > British Pound and other currencies 3 %. > > Now with the arrival of Euro, it should have taken > 10 % from Mark & 2 % from Franc and so a total of > 12 %. May be in a year or 2, it will grab the 3 % > share from British Pound. > > Still US$ leads with 80 % share. > > Note : Interbank transactions means when a Canadian > sends money to India, it will be done through some > international currency like US$ or Euro instead of > Canadian $ or Indian Rupee. > > Madan > > --- kilopascal <[EMAIL PROTECTED]> wrote: > > From: "kilopascal" <[EMAIL PROTECTED]> > > To: "U.S. Metric Association" <[EMAIL PROTECTED]> > > Subject: [USMA:20244] 'Euro-creep' starts slowly > > Date: Mon, 27 May 2002 08:22:52 -0400 > > Reply-to: [EMAIL PROTECTED] > > > > The euro has overtaken the dollar as the most widely > > used foreign currency > > in Britain, according to a new report from the Bank > > of England. > > But the Bank insisted that use of the European > > currency remained patchy, > > playing down fears of "euro-creep", or introduction > > of the euro by stealth. > > > > Last year, 60% of British firms had predicted that > > the proportion of sales > > and purchases invoiced in euros would increase. > > > > In fact, only 45% of firms reported that this had > > happened, the Bank said. > > > > At the same time, use of euros in retail > > transactions remains restricted to > > a handful of stores in tourist areas, and even there > > accounts for an > > infinitesimal proportion of turnover. > > > > Banking on the euro > > > > Use of the euro is now widespread among company bank > > accounts, where it has > > overtaken the dollar as the most popular foreign > > currency. > > > > At the end of March, the Bank found there were over > > 145,000 euro accounts, > > of which around 90,000 were held by firms. > > > > And the European currency is widespread in border > > regions - especially > > Northern Ireland, the only part of the UK that abuts > > directly onto the > > eurozone. > > > > But the Bank insisted that the use of euros in > > Northern Ireland was no > > higher than the previous use of Irish punts, > > indicating that the > > introduction of the single currency had not > > encouraged consumers to change > > their habits significantly. > > > > Smooth running > > > > Less cheering for the eurosceptics, however, was the > > Bank's verdict on the > > changeover to cash euros at the beginning of this > > year. > > > > The launch, the Bank said, was a huge success and > > one that Britain would > > learn from should it decide to join. > > > > Opponents of the currency had been hoping for > > logistical chaos at the turn > > of the year, to increase public opposition to the > > loss of the pound. > > > > But the Bank concluded that the current timetable > > for euro entry - still > > something of a mystery - could not be speeded up > > without running risks. > > > > Popular opinion remains unconvinced over the euro, > > something the government > > hopes may change after many Britons handle the > > currency for the first time > > on holiday this summer. > > > > > > > __________________________________________________ > Do You Yahoo!? > Yahoo! - Official partner of 2002 FIFA World Cup > http://fifaworldcup.yahoo.com > >
