Euro emerged from 2009 crisis in good shape: ECB
FRANKFURT (AFP)
Europe’s single currency made it through a year of financial turmoil in 2009 in good shape and is still the world’s second biggest reserve currency, the European Central Bank said on Wednesday.
An annual ECB review of the currency’s international role found “the euro remained firmly anchored in 2009 as the second most important international currency globally, after the US dollar” and ahead of the Japanese yen.
Although 2009 witnessed a major economic crisis and disruptions to financial markets, the study suggests “that any shifts in the international or global role of the euro as a direct consequence of the crisis cannot be detected.”
The ECB estimated that around 20-25 percent of the single currency circulated outside the 16-nation eurozone, primarily in neighbouring countries.
When measured at constant exchange rates, the amount of euros held in international bonds declined by 1.3 percentage points, however, and the volume of cross-border loans in euros was 1.6 percentage points lower, the data showed.
Meanwhile, the euro’s share of cross border deposits and foreign exchange transactions “remained virtually unchanged,” the ECB said.
The changes were “fully in line” with variations seen in the years prior to the global economic and financial crisis, it added.
Data compiled since 1999 suggest that the euro’s international role grew during its first years of existence but has since “remained relatively stable relative to that of other international currencies.”
In 2009, the euro accounted for 27.3 percent of global foreign exchange reserves, the ECB said, up from 27 percent the previous year.
Citing its own data as well as that provided by the International Monetary Fund, the ECB said the dollar accounted for 62.2 percent of foreign exchange reserves, while the Japanese yen represented 3.0 percent.
This year, the single currency has fallen sharply in value against the dollar owing to concern sparked by excessive deficits and debt in many eurozone countries.
The euro traded on Wednesday at around 1.27 dollars, down from 1.43 dollars at the end of 2009.