A few weeks ago, UK Prime Minister David Cameron urged European leaders to wheel out their ‘big bazooka’ to tackle the eurozone debt problem. That’s mighty impressive language – a bit reminiscent of the ‘shock and awe’ terminology that preceded the last Gulf war. The only problem was that I couldn’t find any decent explanations at the time in the regular news and media outlets of exactly what Mr. Cameron meant by the phrase ‘big bazooka’.
The adoption of the single European currency in late 1999 had a mixed effect on currency transfer operations and the overall economic performance of the European Union (EU). It lowered some costs but spurred doubts about the ability of national governments to control financial markets in times of crisis. Doubts notwithstanding, the euro has already become a major world reserve currency and is bound to grow even stronger if it manages to replace the U.S. dollar as the oil trading currency.