What if the euro’s share of global foreign exchange reserves rose sharply?

The euro’s share of global foreign exchange reserves fell just after its creation, then rose from 2002 to 2008 before falling again and remaining low. If the euro’s share rose sharply, the currency would also appreciate sharply against the dollar, like over the period 2002-2008. Such a development is possible, given: The increase in the United States’ external debt, which may worry international investors; The fact that China, Russia and Japan are no longer buying dollar-denominated bonds; The progress made in Europe: development of new technologies, solidarity with the European recovery plan, an employment rate that is now higher than that of the United States; The emergence of a European Union debt, which will attract Europe’ s savings at the expense of the US Treasury market; The elimination of the prospect of a crisis in the peripheral countries thanks to the ECB’s intervention.