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Discuss the status of the euro and the yuan in international finance and trade and the strenths and weaknesses of the dollar as the leading currency.

As the United States gained economic power and political influence relative to Great Britain after World War II, the dollar emerged as the key currency in international use, replacing the pound sterling. Some observers believe that the dollar might in turneventually be supplanted in international use by another currency. The mark and yen both gradually rose in prominence in the 1970s and 1980s at the expense of the dollar. This trend, however, fizzled outin the 1990s.A new challenge was created on the first day of 1999 whenthe euro, the currency of the European Monetary Union (EMU) was born. The euro has now fully replaced the Deutche mark, French franc, and ten other European currencies as well. An increasing number of countries now hold reserves in euros and issue debt denominated in it. Because the euro has become the home currency among a set of countries that are collectively almost as large as the United States, it could aspire eventaully to rival the dollar as an international currency. Chinas emergence as an economic superpower imposes another threat to the dominance of the U.S. economy, and the dollars status as the vehicle currency could also be challenged by the yuan, the currency of China. Some coutries have begun to use the yuan in their international transactions.The dollar is still enjoying its dominant position in international real and financial transactions. The choice of currency is based not only on the current relative importance of the respective countries in the world economy, but also on the relative use of the various currencies in the recent past. It has been estimated that roughly 60 percent of U.S. dollars are held abroad. Like the English language, people will continue to use the dollar internationally as long as the U.S. economy maintains its superiority in the world economy.Discuss the status of the euro and the yuan in international finance and trade and the strenths and weaknesses of the dollar as the leading currency. Do you think that the euro or yuan will eventually supplant the dollar?