The ECU as international money

Abstract

The ECU is compared with alternative foreign currencies to determine how adequately it performs the various functions of international money. For the period April 1979 through December 1984 it is found that for most European economic agents the ECU was superior to the SDR, the US dollar, and a representative foreign currency (the Netherlands guilder) as a unit-of-account, as a store of value, and as a means of deferred payment. An examination is made of the distribution of the series of exchange-rate changes so that appropriate statistical methods are employed in making a final assessment about the variability of the ECU.