ECB | Europe Needs to Act to Strengthen the Role of its Currency

Blog | The euro’s international use has grown in recent years, but largely by circumstance rather than by design. In a more contested global monetary system, Europe needs to act deliberately to strengthen the role of its currency – building on solid foundations, keeping pace with global shifts and matching policy ambition with concrete steps.

The international monetary system is becoming more contested. Major economies that once trusted the system to work on its own are now actively shaping the use of their currencies. Europe has so far been an exception. The global role of our currency has gradually gained ground in recent years, but largely by circumstance rather than by choice. This is no longer enough. In a changing global environment, the euro should serve a clearer purpose for Europe, and Europe should be willing to act to make this happen.

The international monetary system is becoming more contested. Major economies that once trusted the system to work on its own are now actively shaping the use of their currencies. Europe has so far been an exception. The global role of our currency has gradually gained ground in recent years, but largely by circumstance rather than by choice. This is no longer enough. In a changing global environment, the euro should serve a clearer purpose for Europe, and Europe should be willing to act to make this happen.

The starting point is favourable. Since the mid-2010s the composite measure of the euro’s international role has risen by around 1.5 percentage points. The euro’s share in global reserves is around 20%, much as it has been for two decades. But international debt issued in our currency reached close to €1 trillion last year, the highest annual level since the single currency was introduced. During several episodes in 2025, when investors looked for safety they bought euros and euro-denominated assets at the same time as they sold US dollars and Treasuries.

This progress rests on two foundations.

The first is structural. Europe is the most open major economy in the world, with exports of close to €4 trillion last year. Our resolve to uphold the rule of law even under unprecedented pressure, the independence of our central bank, our robust fiscal framework and the openness of our single market are structural qualities no longer universally on offer.

The second is that in the areas where Europe has acted with intent, results have followed. A consistent European framework on green and sustainable finance led to market leadership: the euro has overtaken the dollar to become the leading currency in the global green bond market for the first time. And instant payments are taking off at an exponential speed, underpinned by EU legislation and the pan-European fast payment system operated by the Eurosystem.

Where we have made choices, we have made progress. But more is now needed.

Nearly a third of China’s external trade is settled in renminbi, up from almost nothing a decade ago. The currency’s share in global trade financing has reached 8%, ahead of the euro. And more than 20% of French trade with China is now invoiced in renminbi. These developments reflect a deliberate policy by China to expand the role of its currency in the areas where it has economic weight to bring to bear.

And that shift is not confined to China. In the United States, recent legislation on dollar-denominated stablecoins underpins a deliberate effort to extend the currency’s network into the digital realm. US dollar stablecoins are marginal in international payments today, accounting for a fraction of a percent of cross-border flows. But the intent is to use new technology to further entrench an already dominant currency. The world’s largest economies are taking deliberate action. Europe cannot afford to be the one that does not.

The ECB is doing its part within its remit by contributing to macroeconomic stability – price stability, financial stability and a sound banking sector – and by ensuring the availability of euro liquidity. We have recently decided to expand EUREP, our repo facility for central banks, to support the smooth transmission of our monetary policy: starting this year, we will provide standing access to euro liquidity against high-quality euro-denominated collateral. Allowing a wider set of central banks around the world to address risks of euro liquidity shortages swiftly will boost confidence in using the euro globally.

We are also leading the way in ensuring central bank money is fit for the future. We will start issuing tokenised central bank money in September this year for the settlement of wholesale transactions. We are preparing to complement cash with its digital equivalent – the digital euro – for day-to-day payments. And for cross-border payments, we are working on interlinking our own fast payment system with those of other countries, in a way that respects their sovereignty. Together, these initiatives will ensure the euro remains at the technological frontier.

But boosting the broader determinants of a currency’s standing – economic strength, geopolitical weight and legal certainty – is down to the EU legislators. Delivering a genuine single market, a savings and investments union, higher productivity and the necessary capability to protect Europe’s external and energy security would boost confidence in its growth potential and resilience. The EU could also support the role of the euro in invoicing and trade finance, consistent with its leading role in global trade.

A stronger international role for the euro will not come about by itself. We will have to choose it, and put words into action.

Compliments of the European Central Bank