The European Central Bank President Christine Lagarde stated on Monday that the euro has the potential to become a viable global alternative to the U.S. dollar — but only if European governments take concrete steps to reinforce the eurozone’s financial and security infrastructure.
Lagarde pointed out that due to increasing volatility in U.S. economic policy, global investors have recently begun to reduce their exposure to dollar-denominated assets. However, in the absence of a direct alternative, many have turned to gold instead.
Despite being a major currency, the euro’s global influence has remained stagnant for decades. Lagarde attributed this to the incomplete nature of the European Union’s financial institutions and the lack of political will among member states to advance further integration.
Speaking at a lecture in Berlin, she emphasized, “The changes underway are creating an opportunity for a ‘global euro moment.’ But the euro will not automatically gain influence; it will have to earn it.”
To seize this opportunity, Lagarde said Europe must develop broader and more liquid capital markets, fortify its legal frameworks, and back its economic openness with credible security capabilities.
She noted that the dollar’s share of global foreign exchange reserves has declined to 58% — the lowest level in decades — but it still far exceeds the euro’s 20% share.
To elevate the euro’s global role, Lagarde stressed the need for new trade agreements, enhanced cross-border payment systems, and expanded liquidity arrangements with the European Central Bank, making the euro more attractive to companies engaged in international trade.
