AbstractOn January 1, 1999, when eleven nations of the European Union joined together and all shared the same currency, the world's first common currency, known as the Euro, was established. Will this euro mark the fall of the US dollar as the world's dominant currency? What are the effects on the US economy from this bully currency? What impact will this have on travelers from the United States to Europe? The Euro, the effects on America On January 1, 1999, the world saw 11 nations of the European Union merge their currencies with each other and establish the world's first common currency, the Euro. The creation of the Euro will represent the most important development in the international monetary system since the introduction of flexible exchange rates in the early 1970s. The dollar will have its first competitor since it replaced the British pound as the world's dominant currency. One of the most discussed topics regarding the euro is the impact the euro will have on the United States. As for the percentage of dollars held in the reserves of the world's central banks. Currently approximately 60% of reserves held by the world's central banks are held in US dollars, and half of global trade is traded in US dollars. The mighty euro will change the percentage of reserves held in US dollars and will increasingly become a participant in global trade transactions. There was an interview with Chris Giles, an associate of the Financial Times, in which he talks about central bankers being less enamored of the US dollar and increasingly attracted to the euro. Chris Giles says: 65 central banks from around the world were interviewed, and these are the reserve managers. So these are the people who actually manage their money, held by the central bank, in case there are financial crises and they have to put money aside for some precautions. And they said that while they still value the dollar highly – and at the moment about 70-80% of all the money they hold is in dollars – they plan to invest more money in European assets in the future. rather than dollar assets. (National Public Radio,2005,p.1)There are many reasons why the Euro is becoming more attractive to investors and the world's central banks, says Chris Giles again,