European Central Bank President Christine Lagarde suggested that the euro could emerge as a credible alternative to the US dollar as the world’s primary currency for international trade.
Speaking in Berlin on Monday, Lagarde noted that the unpredictable economic policies of the United States have unsettled global investors, prompting them to reduce their reliance on the dollar in recent months. Many have turned to gold, as they have yet to identify a viable alternative.
She remarked, “These ongoing shifts create the potential for a ‘global euro moment.’”
Lagarde explained that investors are looking for “geopolitical certainty elsewhere: they are placing their bets on assets from regions viewed as dependable security partners capable of upholding alliances through hard power.”
She added, “The global economy has long been supported by openness and multilateralism under US leadership, but today, that foundation is fracturing.”
While the dollar’s dominance has been gradually weakening, it still accounts for 58 percent of international reserves—the lowest in decades but significantly higher than the euro’s 20 percent share.
Lagarde emphasized that for the euro to take on a larger role, it must be backed by stronger military capabilities to support its alliances.
via Reuters