ECB Chief Urges Strengthening Euro Amid Declining Dollar Trends
Christine Lagarde highlights decline in U.S. dollar's global reserve share amid rising gold holdings worldwide.
European Central Bank (ECB) President Christine Lagarde delivered a compelling call on Monday for the euro to assume a stronger international role, as she highlighted growing uncertainty surrounding the long-standing dominance of the U.S. dollar in global markets.
Addressing an audience at the Hertie School in Berlin, Lagarde emphasized the risks that increased fragmentation of the global financial system could bring for Europe. “The changing landscape could open the door for the euro to play a greater international role,” Lagarde stated, signaling a potential shift in the balance of international currencies.
Lagarde underlined several advantages associated with an expanded global presence for the euro. Among these, she mentioned the potential for lower borrowing costs for both governments and businesses throughout the eurozone, heightened domestic demand, and improved resilience against external shocks. “It would allow Europe to better control its own destiny,” she affirmed.
Despite the euro currently making up approximately 20 percent of global foreign exchange reserves—positioning it as the second most-used currency after the U.S. dollar—Lagarde warned that growing this influence will not occur “by default.” Instead, she proposed three strategic pillars to elevate the euro's standing: preserving open trade supported by credible security capacities, reinforcing the economic foundation of the euro area to attract global capital, and fortifying the region’s legal framework through the steadfast defense of the rule of law.
Lagarde also pointed to an important trend: the U.S. dollar’s share in global foreign exchange reserves has dropped to its lowest level since 1994, as central banks around the world have turned to accumulating gold. This, she argued, highlights a period of transformation in the international monetary system akin to previous turning points in history.
“These changes are creating a unique window—a ‘global euro moment’—for Europe,” Lagarde said, urging policymakers to seize the opportunity. “This is a prime opportunity for Europe to take greater control of its own destiny,” she concluded, setting out a vision for a more assertive European economic future on the world stage.
