Edited by Patrick Artus, André Cartapanis and Florence Legros
Chapter 6: The Dollar, the European and Exchange Rate Regimes in Latin America
6. The dollar, the euro and exchange rate regimes in Latin America1 Luis Miotti, Dominique Plihon and Carlos Quenan The creation of the euro on 1 January 1999 was one of the major economic events of the end of the twentieth century. Completing a lengthy process of economic integration, the emergence of the European Monetary Union is likely to produce signiﬁcant transformations in international monetary and ﬁnancial relationships. This view is based on the economic weight of the euro zone, close to the weight of the United States, and on the desire of the monetary authorities not to restrain the internationalization process of the new European currency. However monetary history shows that the process of birth and decline of international currencies is very slow and subject to important inertia. This inertia is particularly important for the functions of medium of exchange and store of value. The ﬁrst years of existence of the euro conﬁrm this view. They also seem to give some credit to the analyses, proposed before the creation of the euro, which mentioned the possibility of an important role of the euro with respect to ﬁnancial operations. These approaches also stressed the idea that the evolution of the international monetary system is related to the choice that will be made with respect to endebtment and investment currencies. In this respect the signiﬁcant growth of international bond issues in euros during recent years is a very important fact. Latin America actively participated in the growth of...
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