If war breaks out in the Middle East involving Israel and Iran, will the euro and the U.S. dollar suddenly just collapse.?

This probability involves significant geopolitical tension, which indeed can have profound effects on global financial markets. However, the assertion that the euro and the U.S. dollar would “suddenly just collapse” due to a war between Israel and Iran simplifies the complexities of currency stability and global financial systems.  In times of geopolitical uncertainty, especially involving major oil-producing regions like the Middle East, there can be significant volatility in global markets. The euro and the U.S. dollar might experience fluctuations due to changes in oil prices, investor sentiment, and shifts in global trade dynamics. However, both currencies are backed by large, diversified economies and central banks capable of taking measures to stabilize their currencies. A complete collapse is highly unlikely without additional, extensive global financial crises. Central banks, such as the European Central Bank (ECB) and the Federal Reserve in the U.S., have tools at their disposal to manage currency stability. These include interest rate adjustments, quantitative easing, and in extreme cases, interventions in the forex markets. These measures are designed to prevent the collapse of their currencies. The introduction and adoption of a new global currency as a dominant medium of exchange would require unprecedented coordination among countries and would likely be a gradual process, not an immediate one. The current global financial system is deeply entrenched in the use of the U.S. dollar as the world’s primary reserve currency, followed by other currencies like the euro. Any new currency, such as a digital currency or a currency proposed by another sovereign entity, would need to gain widespread trust and acceptance. The idea of a new global currency immediately replacing the euro and the dollar is speculative and not grounded in the current realities of international finance. Transitioning to a new global currency would involve complex negotiations, legal frameworks, and widespread agreement among nations, which is a lengthy and uncertain process. Therefore, while a conflict involving major nations like Israel and Iran could lead to economic uncertainty and market volatility, the collapse of major stable currencies like the euro and the U.S. dollar would require far more extensive global financial turmoil. The replacement of these currencies with a new global currency would not be immediate and would involve a complex, multi-faceted process.