European Central Bank President Christine Lagarde has outlined a path for the euro to expand its global influence, spurred by what she describes as the “erratic policies” of former President Donald Trump. Speaking in Berlin, Lagarde articulated a strategy for the eurozone to leverage the current geopolitical climate to strengthen its currency’s international standing.*
Lagarde’s remarks underscore the potential for the European Union to capitalize on Trump’s trade policies and perceived weakening of US institutions. “The ongoing changes create the opening for a ‘global euro moment,'” Lagarde declared. “This is a prime opportunity for Europe to take greater control of its own destiny.”
The ECB noted in its latest report that the euro’s role as an international currency remained “broadly stable” in 2023. Lagarde pointed to key areas to enhance this role, including solidifying geopolitical foundations, completing the single market, and increasing joint European financing for public goods like defense.
Economic experts view joint financing as crucial. “Economic logic tells us that public goods need to be jointly financed,” Lagarde said, highlighting the necessity for a broader European bond market to support a larger role for the euro.
Recounting historical challenges to the dollar, Lagarde recalled the 1970s under President Nixon when gold convertibility was suspended. Unlike then, the euro now stands as a viable international counterpart to the dollar. This perspective aligns with recent investor actions, as confidence in the dollar wanes amidst ongoing trade tensions—a shift Lagarde had previously deemed “counterintuitive.”
Bundesbank President Joachim Nagel, speaking at a separate event, echoed Lagarde’s sentiments, calling for Europe to become more resilient and independent. “Perhaps we were too naive in the past,” Nagel stated. “We now need to work on ourselves and rethink our economic model and defense policy.”
As Europe navigates these transformative times, the leadership’s vision reflects a concerted effort to bolster the continent’s economic sovereignty and resilience, laying the groundwork for the euro to assume a more prominent role on the global stage.
