The author analyzes the future prospects of the euro to be an international currency from a portfolio perspective. Usually daily bond and exchange-rate data during the period 1996-1998, he constructs an optimal benchmark portfolio for representative investors from the U.S., Japan, the U.K., and the three major European countries participating in the euro: France, Germany, and Italy. Subsequently, he distinguishes three plausible (euro) exchange-rate scenarios and three plausible (European) bond market scenarios as a result of the coming of the euro. Then, the portfolio optimization is implemented again under nine scenarios. Generally, the outcomes suggest that an increase in net demand for euro assets is unlikely, due to the inherent reduction of attractive diversification possibilities. For a given Eurobond supply this, in turn, implies a depreciation of the euro. Potential entry of the United Kingdom into the euro area is not seen to change the results. However, increasing depth and liquidity of European bond markets, together with lower transaction costs, may reverse the conclusions. Finally, Kool shows that both actual supply and demand developments in international bond markets in 1999 are consistent with the observed depreciation of the euro relative to the U.S. dollar.