Alexander Weber, Mark Schroers and Jana Randow
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President Donald Trump’s erratic policies offer a “prime opportunity” to strengthen the euro’s international role and allow the currency bloc to enjoy more of the privileges so far reserved for the US, European Central Bank President Christine Lagarde said.
If national governments can solve issues that have long restrained the European Union’s economic potential, they could be rewarded with lower borrowing costs as well as protection from currency fluctuations and sanctions, Lagarde said in a speech in Berlin.
“The ongoing changes create the opening for a ‘global euro moment,’” she said Monday. “This is a prime opportunity for Europe to take greater control of its own destiny. But this is not a privilege that will simply be given to us. We have to earn it.”
The comments show how policymakers in the region are seeking to turn Trump’s attacks on global trade and US institutions to their advantage. Such aspirations have received encouragement from investors, who’ve sold the dollar on the tariff mess. That’s boosting the euro in a move Lagarde has previously called “counterintuitive” but justified.
In Monday’s speech, she recalled previous episodes in which US action could have challenged the dollar’s role as the leading reserve currency, including Richard Nixon suspending convertibility into gold in the 1970s. While there was no robust alternative back then, today’s there’s the euro — “another international currency alongside the dollar,” Lagarde said.
In its most recent report on the subject, the ECB noted that the euro’s international role had remained “broadly stable” in 2023. Lagarde highlighted three areas that are critical to enhance its global status.
First, she urged “a solid and credible geopolitical foundation by maintaining a steadfast commitment to open trade and underpinning it with security capabilities.”
Second, she repeated calls to complete the single market, help start-ups, trim regulation and build the savings and investment union, toward which progress has been slow.
Lagarde also reiterated that there should be more joint financing on the European level for measures including defense — another politically contentious idea. Progress on that front would mean investors would have a deeper pool of securities to tap into, she said.
“Economic logic tells us that public goods need to be jointly financed,” Lagarde said. “And this joint financing could provide the basis for Europe to gradually increase its supply of safe assets.”
