Euro weak reserve

The only measure that matters in judging a reserve currency is the liquidity of the market for that currency.

When a central bank needs to defend its currency, it needs a market where it can buy up its currency using the reserves it has on hand. This requires a currency market that can absorb large transactions.

Currency support operations using the Euro are more likely to drive down the value of the Euro than to support which ever currency is under attack.

The liquidity of the Euro currency (and government bond market) are not much bigger than the DeutschMark market that it replaced.

http://www.economist.com/blogs/freeexchange/2006/12/is_the_d...

First Time more Euro cash than Dollars
The value of euro notes in circulation is this month likely to exceed the value of circulating dollar notes, according to calculations by the Financial Times.

Euro notes cash in to overtake dollar
http://www.ft.com/cms/s/0/18338034-95ec-11db-9976-0000779e23...