I tried to research about this issue, and found that is is unlikely. The main reason is that there aren't enough Euros in circulation. Mr. Chris Cook, who was a former director of ICE Futures Exchange's predecessor, the International Petroleum Exchange, cited a recent article on Hong Kong-based Asia Times Online by William Engdahl, who specializes in the geopolitics of oil. "For the euro to begin to challenge the reserve role of the U.S. dollar, a virtual revolution in policy would have to take place in Euroland," Mr. Engdahl wrote. "First the European Central Bank . . . would have to surrender power to elected legislators. It would then have to turn on the printing presses and print euros like there was no tomorrow." But if that happens, I guess the Euro would become as Fiat as the US dollar, and the end result would be the same. If the markets are flooded with Euros, just like US Dollars, then what difference does it make? So, I suppose there has to be some new system in place for Euro to become a World Reserve Currency. What do you all think on this issue?
Yes. IIRC, Eurozone GDP already exceeds American GDP. While GDP is a bad indicator for true prosperity and growth, it is valuable for a rough estimation of velocity. The Euro is as fiat as the dollar. It's just that most Americans don't understand how much of our prosperity is a product of our position as the Global Reserve Currency, and the ability to manufacture more goods and services from 3rd world economies, by simply printing more cash that the world, by design, has to accept.
its already going that way, countries that had their reserves in US dollars, now are trying to balance it with euro
But the issue is that there aren't enough Euros in circulation. If the EU decides to start printing enormous quantities of Euros, then obviously the Euro will end up just like the US dollar. Thats why the EU is in no hurry to claim the domination of Euro. Sure, many countries are moving away from the dollar. India, for example, holds 50% foreign reserves in Russian Ruble, Japanese Yen, Pound Sterling and Euros, and the remaining 50% in US Dollars, unlike earlier when 80% of Forex Reserves were held in USDs...
There is not enough Gold. If the Euro or Dollar has to be backed by Gold in order to be printed, then there would be a MASSIVE deflation, Gold Hoarding, and ultimately, the people who have taken Huge credit and loans would go bankrupt, because there would not be enough currency in circulation to pay off all the debts. The US economy completely depends on Fresh Credit Injection in order to function properly. If the new Credit is restricted even for a year, there would be a catastrophic recession. The society, the economy is not designed to function without cheap Credit... Check out - Money as Debt - How much Money is there in the World... - 47 Minute Google Video. HIGHLY RECOMMENDED.
The Fed print money like it has no meaning. I don't think the Euro will take over because the EU Central Bank have more sense. They see how the dollar has devalued and is artificially priced and they don't want that for the Euro.
There is. But to mitigate all of the potential risks you outlined, what's needed is to take the power to administer money away from government, and return it to the market. Maybe we end up with a metal standard, bi-metallism or tri-metallism. Maybe we decide to trade in diamonds or precious stones. The keys for a "money" are 1. Scarcity 2. Durability 3. Transportability 4. Difficulty to counterfeit It won't matter what good or commodity you peg money to, the issue won't be having enough, it's that Fractional Reserve Banking and the Compound Interest Paradox will destroy the currency over time. It is inevitable.
Actually there are more euros in circulation then dollars and two for it to become the reserve currency of the world their economy would need to grow faster then ours and with their laws that run counter to economic growth that isn't going to happen.