ECB President calls for united Europe to boost Euro’s global role

WEB DESK: European Central Bank President Christine Lagarde called on policymakers to seize the moment and increase the euro’s global profile as Donald Trump’s policy undermines confidence in the US dollar.

“This moment of change is an opportunity for Europe: it is a ‘global euro’ moment,” she wrote in an op-ed in the Financial Times published Tuesday.

“To seize it and enhance the euro’s role in the international monetary system, we must act decisively as a united Europe taking greater control of its own destiny.”

Echoing earlier comments, Lagarde stressed that “Europe must strengthen three foundational pillars: geopolitical credibility, economic resilience, and legal and institutional integrity.”

European policymakers, including Lagarde, see an opportunity to challenge the dollar’s decades-long dominance and strengthen the euro’s role, allowing the currently bloc to enjoy more of the privileges so far reserved for the greenback – such as lower borrowing costs for governments and businesses and an economy more insulated from currency fluctuations.

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Investors have rushed out of the US dollar so far this year because of President Trump’s erratic policies, in particular on trade. In addition, investors have become more interested in Europe in the wake of a move toward more public spending, not least in Germany. At the same time, officials are wary of an abrupt shift away from the dollar that could undermine the stability of the global financial system.

However, a recent ECB report showed that the international use of the euro remained flat for another year in 2024, laying bare the depth of the task in competing with the dollar on the global stage.

In her op-ed, Lagarde noted that “such a step toward greater international prominence for our currency will not happen by default: it must be earned.”

“As in previous periods, today’s concerned about the dominant currency are not yet triggering a major shift toward alternatives,” she said. “Instead, they are reflected in a rising demand for gold.”

She also stressed that an international reserve currency “comes with responsibilities.”

“To avert euro liquidity shortages abroad, the ECB extends swap and repo lines to key partners to safeguard the smooth transmission of its monetary policy,” she wrote.

Lagarde double-downed on earlier calls for more qualified majority voting in critical areas and more common EU debt.

“Joint financing of public goods, like defence, could create more safe assets,” she said.