Saudi Arabia has abandoned its policy of diversifying foreign reserves into euros, deeming the eurozone unfit to manage a major world reserve currency.
Muhammad Al-Jasser, the deputy chief of Saudi Arabia's monetary agency, said the dollar remained the safest bet for central banks in the Middle East, despite America's trade and budget deficits. "The euro has not yet gained a competitive status against the dollar as a major reserve currency. People are not going to switch to euros until European financial markets become more competitive, deeper, more liquid and diversified," he said.
A spokesman for Frits Bolkestein, the European single market commissioner, said the criticism is harsh but true. Mr Bolkestein has devoted much of the last five years trying to break down barriers to free capital movement, but has met with implacable resistance from vested interests. |