The Euro and International Capital Markets

By C. Detken, Philipp Hartmann. Social Science Research Network, 2000

121 citations recorded by the source corpus.

This paper provides a broad empirical examination of the major currencies' roles in international capital markets, with a special emphasis on the first year of the Euro. A contribution is made as to how to measure these roles, both for international financing as well as for international investment. The times series collected for these measures allow for the identification of changes in the role of the Euro during 1999 compared to the aggregate of Euro predecessor currencies, net of intra-Euro area assets/liabilities, before stage 3 of EMU. A number of key factors determining the currency distribution of international portfolio investments, such as relative market liquidity and relative risk characteristics of assets, are also examined empirically. It turns out that for almost all important market segments for which data are available, the Euro immediately became the second most widely used currency for international financing and investment. For the flow of international bond and note issuance it experienced significant growth in 1999 even slightly overtaking the US dollar in the second half of the year. The Euro's international investment role appears more static though, since most of the early external asset supply in Euro is actually absorbed by Euro area residents.

Subfields: Finance

View Paper: https://www.semanticscholar.org/paper/b8a9382b6384cdcc3851d5718b62338ca6c14ede

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Citations in the corpus

The Euro Area Financial System: Structure, Integration and Policy Initiatives (2003, background): “As the holdings of euro area government bonds outside the euro area did not change very much (see Detken and Hartmann 2000, figure 8, and 2002, figure 4 and table 5), it is likely that most of the cross-border diversification reflects intra-euro area investments.”
The Euro and European Financial Market Dependence (2007, background): “Detken and Hartmann (2000, 2002) and Perée and Steinherr (2001) show that the Euro has become one of the three major currencies in the world after its introduction, taking its place alongside the U.”
Optimal Currency Shares in International Reserves: The Impact of the Euro and the Prospects for the Dollar (2006, unknown): “[16] Detken, Carsten, and Hartmann, Philipp (2000).”
The Impact of the Euro on Money and Bond Markets (2000, background): “28 Some reviews of the implications of EMU for capital markets are Dermine and Hillion (1999), Gros and Lanoo (2000), Bishop (1999), Danthine, Giavazzi and von Thadden (2000), Gros (1998), McCauley and White (1997), Mayer (1999) and Prati and Schinasi (1997).”
The European Bond Markets Under Emu (2004, unknown): “However, Detken and Hartmann (2000) have rightly pointed out that these numbers understate the international use of the dollar, because of the global importance of the US market.”
Why the Euro Will Rival the Dollar (2008, background): “Detken and Hartmann (2000) studied the data from the euro’s first year in operation, doing a careful job of netting out intra-euro-area holdings in order to be able to trace back a measure of euro-precursor currencies for five years before 1999 that is comparable with post-1999 numbers.”
Will the Euro Eventually Surpass the Dollar as Leading International Reserve Currency (2005, unknown): “[Detken and Hartmann (2000) studied the data from the euro’s first year in operation, doing a careful job of netting out intra-euro-area holdings in order to be able to trace back a measure of euro-22 precursor currencies for five years before 1999 that is comparable with post-1999 numbers.”