ECB’s Nowotny: EUR unlikely to displace dollar; multi-polar world more likely

Austrian central banker Nowotny says looking out over the next 10 years, it is very unlikely that the euro will replace the dollar as the global reserve currency. He says it is much more likely that there is an evolution to a multi-polar world in terms of both transactional currencies and reserve assets. The challenge for the euro area is to ensure that macroeconomic and financial stability to support confidence in the euro as an investment asset.

So far, there has been surprisingly little effort by ECB officials to slow the euro’s advance. Given that the nascent European recovery has been export-led, they likely are not far from trying to throw a bucket or two of water on the fire…