Could the euro overtake the dollar as the world's premier reserve currency soon? Yes, says Niall Ferguson, professor of international history at Harvard University. At Euromoney's Euro Fixed-Income Forum in Paris last month, Ferguson said that a growing US fiscal deficit in the short term, and the likely bankruptcy of the US social security system, could produce a crisis of confidence in the dollar.
Ferguson, known for books on the British and US empires, started his career with a history of early 20th century Hamburg business life. A history of the Rothschild family followed, as did a book on the relationship between money and power.
It was when combing through data on the amounts the UK owed after World War II that he noted similarities with the current position of a globally committed US.
And the difference between this and the other crises of confidence in the dollar? ?There is now an alternative,? he says. ?The euro.? That went down well with a pro-euro audience.
European Investment Bank president Philippe Maystadt had already spoken of the benefits the euro brought, not least to large borrowers such as the EIB.
But there was as sting in the tail. The euro has been a disaster for managing large European economies, said Ferguson. ?Just look at Germany.?