In both cases, a number of political, institutional, financial and economic factors contribute to increasing the popularity of an international currency. I will review these factors with particular reference to the euro. Economic and financial conditions Let me start with the economic and financial conditions supporting the international role of currencies.
The size of the economy and its foreign trade flows are crucial to promoting the international status of a currency. This is because there are scale economies and network externalities in using the currency that is also used by other agents in international transactions.