The “four I's” of the international monetary system and the international role of the euro

•Highlighting the main negative externalities of the current international monetary system.•The euro cannot replace the US dollar the main international currency.•The euro is an incomplete currency.

This article highlights the main sources of negative externalities in the current international monetary system, through a “four I's” approach (instability, incertitude, inequity and insufficiency of the aggregate demand). It then questions the ability of the euro to contribute to a more balanced and sustainable international monetary regime. The euro cannot become a major international currency without long-term growth in the Eurozone, without the creation of a unified marketplace for public debt backed by the European Central Bank, and without shared desire to internationalize the euro, particularly as an invoicing currency for trade.