possibly more – other major international currencies. second, the euro can only be assured of a major role in a multipolar currency world if the architecture underlying the single european currency is sufficiently strong. the task of achieving this cannot be delegated to financial markets and requires appropriate institutional steps. the euro in a multipolar world when the idea of the single currency was first mooted in the 1980s, the global economy was dominated by three countries : the united states, germany and japan. since then, the global economy has seen major changes. with the ongoing integration of global markets, we have witnessed the rise of emerging market economies. china, in particular, has led to a progressive shift in the centre of economic gravity and is expected to overtake the united states in terms of gdp at market exchange rates sometime from 2025 onwards. the us dollar has remained the main international currency, as a result of the predominance of us financial markets and also the inability of several emerging economies to pursue independent policies ( for example by de - pegging their currencies from the us dollar ). but there is little reason to believe that these factors will not change over time. the renminbi, in particular, should be in a position to relatively quickly emancipate itself from the dollar and become a major international currency if the chinese authorities were to consistently pursue capital account liberalisation, greater exchange rate flexibility and all related policy measures in the years to come. the international role of some other emerging market currencies is also likely to increase over time. we are clearly moving towards a multipolar currency world. the question is whether the euro will be one of the poles – so to speak – of the new system. i will not dwell on the advantages for europe of being one of the poles, but rather i invite you to reflect upon what would happen if it were not. to be sure, the euro, like any other currency, would be affected by economic and political developments in the countries issuing the leading reserve currencies, and would suffer severely from external shocks. consider, as an illustration, the recent experience of the swiss franc, a currency which is renowned for its stability. after the onset of the global financial and economic crisis the franc appreciated by 17 % vis - a - vis the euro in 2010 alone, driven by the reallocation of global capital on a massive scale. this has fuelled deflationary risks and slowed economic growth. to counter

discovered america at the end of the fifteenth century, even though china ’ s economic development was much more advanced and had a much greater army and navy. 2 i would like to quote briefly diamond : “ christopher columbus, an italian by birth, switched his allegiance to the duke of anjou in france, then to the king of portugal. when the latter refused his request for ships in which to explore westward, columbus turned to the duke of medinasedonia, who also refused, then to the count of medina - celi, who did likewise, and finally to the king and queen of spain, who denied columbus ’ first request niall ferguson, “ civilisation : the west and the rest ”, allen lane, 2011 ; ian morris, “ why the west rules – for now ”, farrar, 2010. jared diamond, “ guns, germs and steel ”, norton, 1997. bis central bankers ’ speeches but eventually granted his renewed appeal. had europe been united under one of the first three rules, its colonisation of the americas might have been stillborn. ” the spirit of competition and the decentralised decision - making mechanism that characterised europe in past centuries explain, for example, why european navigators strove to discover new routes ; how the foundations of commercial dominance were laid ; and how scientific discoveries, which often originated abroad, were turned into innovations and new production processes. again, using diamond ’ s words : “ once spain had launched the european colonisation of america, other european states saw the wealth flowing to spain, and six more joined in colonizing america. the story was the same with europe ’ s cannon, electric lighting, printing, small firearms, and innumerable other innovations : each was first neglected or opposed in some parts of europe for idiosyncratic reasons, but once adopted in one area, it eventually spread to the rest of europe. ” europe rose to dominance over the centuries to the extent that the positive effects of competition prevailed over the negative effects associated with the recurrent conflicts between states that stemmed from the inability to resolve the tensions generated by competition. the european union was created precisely in order to ensure that the spirit of emulation and competition could operate within a framework of peace. there is no doubt that there are currently substantial differences within europe, with some countries demonstrating a strong capacity to adapt to the new global conditions, while others are finding it hard to implement the changes that are necessary to maintain their level of prosperity and continue to grow. these