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Comment by onlyrealcuzzo | Hacker News Reader

> But it only happens when the euro is significantly weaker than it was intended to be.

This isn't how central banks value their fiat currency.

If for some reason the Fed puts 20% interest on the USD, the value of the USD would increase dramatically. The Euro is under no obligation to set its value with respect to the USD or the Pound.

There is no "intended" value of the Euro with respect to other currencies.

There's an "intended" value of the Euro with respect to keeping European governments solvent and keeping prices steadily increasing.

If the Euro has to drop to $0.01 to achieve those goals, it will. If it has to climb to $100 to achieve those goals, it will.

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> There is no "intended" value of the Euro with respect to other currencies.

This is completely false. For example, the ECB targets 1 EUR = 7.46038 DKK.

It was "intended" when the price was originally set. The goal was that the European economy would keep its ratio to the US roughly the same.

Central banks do have some thumb on that scale, but as you say, it's entirely about keeping the economies healthy, not maintaining any specific ratio to other currencies. If it has fallen so far that the ratio is 1.0, that's not a problem for the currency itself, but it does happen because the economy is struggling more than the American economy is.

> It was "intended" when the price was originally set. The goal was that the European economy would keep its ratio to the US roughly the same.

This is just a baseless assertion you’ve made repeatedly. You should provide some source and be a tad less aggressive about it if you want to be convincing.

I'm no expert here, but was interested in why EUR has always been somewhat close in value to USD instead of being worth a lot more or a lot less, so I tried to look it up. EUR was set 1:1 to a previous unit of account (not a circulating currency) called the European Currency Unit (ECU), which was set 1:1 to an even earlier iteration, the European Unit of Account (EUA). According to Wikipedia, EUA "was defined as 0.888671 grams of gold, or one US dollar."[1] This was in 1962 when the US was on the gold standard. USD and ECU/EUA began drifting apart starting in 1971 when we abandoned the gold standard. So I guess you could say that the original intent was for dollar parity, but that decision was pretty far removed from the creation of the euro over 30 years later.

[1]: https://en.wikipedia.org/wiki/European_Unit_of_Account

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