[DEBATE] : Greenspan: Euro Gains As Reserve Choice

[tony roshan samara]

Greenspan: Euro Gains As Reserve Choice
     
     By AP
     
     Report: Former Fed Boss Says Euro Could Replace U.S. Dollar As      Favored Reserve Currency 
     
     09/17/07 -- - FRANKFURT, Germany (AP) -- Former U.S. Federal      Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of      choice.
     According to an advance copy of an interview to be published in      Thursday's edition of the German magazine Stern, Greenspan said      that the dollar is still slightly ahead in its use as a reserve      currency, but added that "it doesn't have all that much of an      advantage" anymore.
     
     The euro has been soaring against the U.S. currency in recent      weeks, hitting all-time high of $1.3927 last week as the dollar      has fallen on turbulent market conditions stemming from the      ongoing U.S. subprime crisis. The Fed meets this week and is      expected to lower its benchmark interest rate from the current      5.25 percent.
     
     Greenspan said that at the end of 2006, some 25 percent of all      currency reserves held by central banks were held in euros,      compared to 66 percent for the U.S. dollar.
     
     In terms of being used as a payment for cross-border      transactions, the euro is trailing the dollar only slightly with      39 percent to 43 percent.
     
     Greenspan said the European Central Bank has become "a serious      factor in the global economy."
     
     He said the increased usage of the euro as a reserve currency      has led to a lowering of interest rates in the euro zone, which      has "without any doubt contributed to the current economic      growth."
     
     http://www.stern.de