Chapter 9 - Article #1 Flashcards
What event marked a significant step in enhancing the euro’s international role?
A. The creation of digital currencies by the ECB.
B. The issuance of €20bn bonds under the NGEU scheme.
C. The adoption of euro-linked commodities trading.
D. The merger of major European central banks.
B. The issuance of €20bn bonds under the NGEU scheme.
Why is the NGEU bond issuance considered a game-changer for the euro?
A. It eliminates credit risk by being backed by all EU states.
B. It replaces the need for U.S. Treasury bonds globally.
C. It allows fiscal redistribution across member countries.
D. It introduces a digital euro as a reserve currency.
A. It eliminates credit risk by being backed by all EU states.
What percentage of global foreign exchange reserves is currently held in euros?
A. Around 20%.
B. About 50%.
C. Nearly 60%.
D. Less than 10%.
A. Around 20%.
What was a key factor that diminished the euro’s global influence after 2007?
A. Brexit and the loss of a financial hub.
B. The eurozone financial crisis and investor concerns.
C. The rise of China’s yuan as a competitor.
D. American sanctions on European countries.
B. The eurozone financial crisis and investor concerns.
What is the “exorbitant privilege” that the article refers to?
A. Europe’s use of pan-EU bonds.
B. America’s dominance due to the dollar’s reserve status.
C. Asia’s reliance on dollar-denominated trade.
D. The yuan’s growing influence as a global currency.
B. America’s dominance due to the dollar’s reserve status.
What long-term solution does the article suggest to rebalance global currency dominance?
A. Replacing physical currencies with central bank digital currencies.
B. Establishing a multi-currency reserve system.
C. Eliminating trade reliance on reserve currencies.
D. Expanding U.S. Treasury bonds for global use.
B. Establishing a multi-currency reserve system.
What structural issues in Europe still limit the euro’s international appeal?
A. Lack of a unified political system.
B. Absence of a strong financial hub post-Brexit.
C. Thin and fragmented capital markets.
D. All of the above.
D. All of the above.
How has America’s economic policy influenced Europe’s push for a stronger euro?
A. America encourages global use of the euro for diversification.
B. U.S. sanctions forced European businesses to rely on the dollar.
C. America eliminated the use of dollars for global trade.
D. U.S. monetary policy explicitly supports EU bonds.
B. U.S. sanctions forced European businesses to rely on the dollar.
What is a potential benefit of having a global multi-currency system?
A. Reduced reliance on the euro for global trade.
B. Decreased impact of U.S. monetary policies on global markets.
C. Enhanced power of central banks in the developing world.
D. Faster adoption of cryptocurrency as the global standard.
B. Decreased impact of U.S. monetary policies on global markets.
What key role could digital currencies play in reshaping global finance?
A. Replacing physical currencies entirely by 2030.
B. Disrupting dollar dominance through network effects.
C. Creating a fully cashless economy worldwide.
D. Centralizing global financial power under a single entity.
B. Disrupting dollar dominance through network effects.
