The euro area sovereign debt crisis which started in the first half of 2010 and intensified in 2011 further contributed to the already restricted access to bank finance by the euro area corporates. While weakening demand resulting from deteriorating growth prospects in a number of euro area jurisdictions certainly played a role, tensions in sovereign markets affected the supply of bank credit as well.
While an outsized role for the US dollar in the international financial system is sure to persist due to an array of incumbency advantages, it is still useful to speculate about the properties of an international financial system with multiple reserve currencies.