Hi -

Your points are valid, but if Iran were to successfully operate this bourse, it would be a nightmare for the European Central Bank: they would have to significantly expand their monetary base to meet the non-European demand for Euros significantly, and indeed virtually overnight, if the Euro were not to skyrocket in value significantly, further weakening European growth prospects.

Likely?

No: in stark contrast to the Fed, the ECB has only one goal, of controlling inflation. Everything else is subsumed to that goal, per law.

Hence any attempt to set up an alternative to the dollar would either cause a massive increase in the value of the Euro or require the ECB to abandon its core mission. Neither is very likely, to put it mildly.
John F. Opie | Homepage | 01.23.06 - 6:45 am | #