The US Dollar will Lose its Status as the Worlds Reserve Currency Term Paper

The US Dollar will Lose its Status as the Worlds Reserve Currency within the Foreseeable Future - Term Paper Example According to the study euro had been getting closer to the US Dollars in terms of bank note circulation. Since its inception during the latter years of 1990s, the currency is found to be soaring high in terms of popularity especially among the Asian nations where almost two-thirds of total Euro bank notes in circulation are concentrated. The table alongside displays ample information to establish Euro is fast surpassing Dollars in terms of its circulation. To emphasise, stock of Euro has increased by 7 percent between 1999 and 2003 while that of Dollars has receded by 6.7 percent between 2001 and 2006. The diagram alongside shows the extents to which different foreign reserves are found to be growing over the years. Growth in Euro is witnessed as reaching a peak during 2002 and exceeding the corresponding rate for US Dollars. â€Å"With the creation of the euro in 1999, and the growth of the US external debt and current account deficits since then, the economic appeal of the dollar as an international currency has become less distinctive†. In fact, during the post Euro era, the position of US dollar has been fast depreciating owing to the fall in its store of value and liquidity. A downfall in the degree of liquidity of the currency accounts for the huge sums of US Dollar reserves that East Asian nations reserve had been maintaining in their reserves; this specifically is the reason behind a fall in the US Dollar circulation. Prior to the introduction of Euro, US Dollars assumed the topmost position in the international arena.