An Theoretical and Empirical Research on Economic and International Impact of the Euro

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Fujita made researches on the international impact of the introduction of the Euro.(1) The Euro can't become a dominant international currency as the DM at the first stage, because roles of the DM as an international currency was based mainly on the diversity of currencies in the trade or capital transactions within the EMS countries and such diversity disappear when the Euro is introduced.(2) At the second stage the Euro will be used as an international currency mostly in the EU accession countries and some African countries, through such roles as denomination currency, standard currency, intervention currency, reserve currency.(3) The bipolar system of Dollar Area and Euro Area has two different impacts on the international monetary system. The first possibility is the instability of Dollar-Euro exchange rate through huge amount of portfolio shift among the Dollar and the Euro. The second possibility is the stability of the international monetary system through the regulation on the US current account deficits.Takahama made researches on the impact of the Euro on Euro zone economies through re-examinations of Optimum Currency Area.(1) The main economic effect of the monetary union is the control of inflation in the case of higher-inflation countries, but for low-inflation countries such as Germany economic effects of the monetary union may be small. Convergentョ of rate of inflation is not the condition but the outcome of the monetary union.(2) After the introduction of the Euro, the economic loss of individual countries depend on the divergence of industrial structure of the particular countries. If the trade integration within the Euro zone promotes the divergence of industries among participating countries, the economic loss will increase.