The European Central Bank (ECB) is today publishing its annual review of the international role of the euro. The review examines the role of the euro in global markets and countries outside the euro area, with the aim of improving understanding of the current state of the currency´s international role and identifying the main developments and underlying trends in 2001 and in the first half of 2002.
This year´s review further develops the analytical apparatus and statistical coverage of the euro´s international role. Accordingly, it contains a number of new results and datasets on international debt markets, foreign exchange markets, international trade and the use of the euro in third countries. The main findings can be summarised as follows:
The euro is the second most widely used currency internationally and its role is still growing, albeit gradually, which supports the view that the status of international currencies tends to change slowly.
The international role of the euro has a strong regional focus. The use of the euro as an international currency is most prominent in countries neighbouring the euro area, suggesting that its international role may in many areas be complementary to trade and institutional ties with the European Union. For example, the euro´s role in the exchange rate strategies of third countries is particularly important in some central and eastern European countries. The use of the euro is also important in financial centres geographically close to the euro area, such as the City of London. Lastly, in foreign exchange markets, the euro´s role as a vehicle currency is confined to countries neighbouring the euro area.
To some extent, the euro´s international role has been enhanced by euro area investors. In international debt markets in particular, there are indications that a significant share of euro-denominated bond issues are targeted at and purchased by euro area investors.
The review can be downloaded from the Publications section of the ECB´s website (http://www.ecb.int). Hard copies are also available free of charge from the ECB´s Press and Information Division (Fax: +49 69 1344 7404).