The Euro’s Path to Global Power Depends on Unity and Reform

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Lagarde also wants more global trade to be done in euros. (Pexels photo)

The euro could become a stronger global currency, but Europe still has work to do. European Central Bank President Christine Lagarde says this may be a “global euro moment” but warns the euro must “earn it.”

Right now, the U.S. dollar is still the world’s primary currency, used in about 58% of global reserves. The euro is far behind, at just 20%. Some investors are moving away from the dollar because of unstable U.S. policies—but they’re choosing gold over the euro. Why? Because Europe’s financial system is still not fully developed.

Lagarde says Europe needs to fix several issues. Its capital markets are fragmented, and there is no single safe investment like U.S. Treasury bonds. Investors want safe, liquid assets, and they want to know they’re investing in a region that is both economically and politically strong.

She also said the euro will grow stronger if Europe can improve its security and military power. Investors often choose currencies from countries that are stable and can defend their alliances. Without stronger security, the euro may struggle to gain the trust of its users.

Lagarde also wants more global trade to be done in euros. That means encouraging countries to use the euro when trading goods. To make this happen, Europe would need better trade deals, faster payment systems, and stronger ties between banks.

One big challenge is joint borrowing. Some countries, such as Germany, are opposed to it. They worry they’ll end up paying for other countries’ debts. However, Lagarde says that joint borrowing could help create the kind of trusted euro assets that investors want.

If Europe can resolve these issues, the benefits could be substantial: lower borrowing costs, greater control over its economy, and protection from external financial shocks.

But it all depends on unity. Without stronger cooperation between countries, the euro may never become a true rival to the dollar. Europe has a chance to act—but time may be running out.