US$ vs € as International Trade Currency
As the currency most often used in international transactions and one of the world’s reserve currencies, the United States dollar (US$) has a history spanning more than 200 years. In addition to being the official currency of the United States, the US$ is either the official or de facto currency of the British Virgin Islands, the Caribbean Netherlands, East Timor, Ecuador, El Salvador, Federated States of Micronesia, Marshall Islands, Palau, Turks and Caicos Islands, Palau, Panama, Cambodia, Lebanon, Liberia and Zimbabwe.
Following a number of attempts at establishing a cohesive monetary system for the developing nation in North America (that would eventually become the United States), the US$ was selected as the monetary unit for the region in 1785. By means of the Coinage Act of 1792 (also referred to as the Mint Act), the US Congress established the United States Mint to regulate coinage of the country in accordance with a decimal system, and declared the US$ as the official currency. Paper money was only introduced into the monetary system of the United States in 1861, primarily to fund the Civil War, and in 1863 the national banking system and US Treasury were established. The US Treasury was then put in charge of overseeing the issuance of bank notes and flow of money between financial institutions. The Federal Reserve was created by means of the Federal Reserve Act of 1913 and continues to regulate the financial system of the country. History reveals that the road to establishing the US$ as the currency of choice for international trade has been a rocky one, and it continues to face challenges in the current climate of economic uncertainty.
There is ongoing speculation that the influence of the Euro may surpass the US$ as more countries adopt the Euro (€) as their official or de facto currency. These include Andorra, Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Kosovo, Luxembourg, Malta, Monaco, Montenegro, Netherlands, Portugal, San Marino, Slovakia, Slovenia, Spain, and Vatican City. Not all European Union countries have adopted the Euro, while some of the countries using the Euro are not EU members, and these numbers are expected to grow as the Euro gains in strength and credibility.