Lagarde: The euro has a global turn and we need a decisive European move

The European President of the Central Bank, Christine Lagarde, has called on policymakers to seize the moment and improve the euro position on the world scene, while Donald Trump’s policy undermines trust in US dollars. “The current transformations are an opportunity for Europe to improve the euro position on the world scene,” according to what Lagarde wrote in an opinion article published in the Financial Times on Tuesday. And “To take advantage of this opportunity and strengthen the role of the euro in the international money system, Europe must move decisively and unity and take over its fate more.” Lagarde, in repetition of previous statements, confirmed: “Europe must strengthen three basic pillars, which are geopolitical credibility, economic flexibility, legal and institutional integrity.” An opportunity to compete with the dollar, European decision makers, including Lagarde, see that there is an opportunity to counteract the long dominance of the dollar and improve the role of the euro, which can benefit the United Currency area, as long as the US currency retains, such as low countries for government and companies, and an economy with greater protection. This year, a wave of exit for investors from the US dollar is due to the volatile policy of President Trump, especially with regard to trade. Investor appetite for Europe has increased in light of the tendency to strengthen public spending, especially in Germany. On the other hand, the officials express their warning against a sudden move of the dollar, due to the threat that it may have to stabilize the global financial system. Challenges before the euro. In a recent report by the European Central Bank, it was shown that the use of the euro at international level remained stable during the year 2024 without growth, emphasizing the depth of the challenges facing the currency to compete with the dollar on the world scene. In his article, Lagarde said that “if Europe wants the euro to become a more influential global currency, it will not happen automatically, but Europe must work hard and make the necessary effort to achieve it.” “As happened in previous periods, current concerns about the dominant currency (the dollar) have not yet led to a major shift to other alternative currencies, but rather appear in the form of increasing demand for gold,” Lagarde said. Lagarde confirmed that the international reserve currency “is not limited to privileges, but rather to accept great responsibilities.” Liquidity support mechanisms Lagarde wrote: “To avoid a lack of liquidity in the euro outside the euro area, the European Central Bank offers mechanisms such as ruillines (currency exchange) and rebuild to large partners to ensure a smooth transition to monetary policy.” Lagarde renewed her emphasis on the need to make the use of mood by a qualified majority (ie decisions without the need to consensus all countries) on fundamental issues, and to increase the issuance of joint debt at the European Union level. She concluded: “The financing of public goods, such as defense, can lead to the issuance of uniform financial instruments that are considered safe and reliable in the market.”