European Central Bank President Christine Lagarde has urged Europe to strengthen the international role of the euro, noting the declining global dominance of the U.S. dollar. Speaking at an event at Hertie School in Berlin on Monday, Lagarde highlighted the uncertainties facing the dollar and the opportunities this presents for the euro.
"The changing landscape could open the door for the euro to play a greater international role," Lagarde said, expressing concerns about the risks posed to Europe by a fragmented international system.
Lagarde outlined the benefits of enhancing the euro’s global status, including lower borrowing costs for governments and businesses, stronger internal demand, and increased economic resilience. "It would allow Europe to better control its own destiny," she emphasized.
Currently, the euro accounts for about 20% of global foreign exchange reserves, making it the world’s second most-used currency after the dollar. However, Lagarde cautioned that the euro "will not gain influence by default."
To boost the euro’s global standing, she proposed three key pillars:
Commitment to Open Trade: Maintaining a steadfast dedication to open trade, supported by credible security capabilities.
Strengthening Economic Foundations: Enhancing the euro area’s economic foundation to make it a top destination for global capital.
Reinforcing the Legal Framework: Defending the rule of law to reinforce the legal framework.
Lagarde also noted that the U.S. dollar’s share in global foreign exchange reserves has fallen to its lowest level since 1994, as central banks worldwide accumulate gold. She suggested that these changes create a chance for a "global euro moment."
"This is a prime opportunity for Europe to take greater control of its own destiny," she concluded.
