ECB President Christine Lagarde said in a speech today that the global economic order is “fracturing”, as multilateralism gives way to bilateral power struggles and protectionism. She highlighted that even Dollar’s dominant role in the global financial system is no longer assured
Lagarde cautioned that this fragmentation poses serious risks for Europe’s economic security and resilience. However, she emphasized that these challenges could be turned into opportunities if Europe adopts the right policy responses, especially when it comes to expanding the “international role” of the Euro.
As the second-most widely held currency, accounting for roughly 20% of global FX reserves compared to Dollar’s 58%, Euro is well positioned to take on a greater global role.
Doing so would bring tangible benefits: lower borrowing costs for EU governments and businesses, reduced vulnerability to FX swings, and greater insulation from external financial coercion or sanctions.
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