The Euro: Limited Impact, Great Promise

Abstract

Sixteen years ago, when it became clear that we would be staying for some time in the U.K., my husband and I decided we should buy a house rather than continue to rent. We were faced with the prospect of bringing money over from the U.S. and converting our dollars into British pounds. Fortuitously, we benefited from the exchange rates at the time. A strong dollar and weak pound meant that our dollars converted to pounds almost on a one-for-one basis. Several months later, in fact, the exchange rate actually hit one-for-one. Two years later, however, the exchange rate was two for one: the dollar had weakened and the pound strengthened, so it took two U.S. dollars to buy one British pound. All of which goes to show that currencies have cycles, just like petrochemicals, economies, and hemlines. Which is why I am not wringing my hands over the condition of the euro—the nominal currency ...