Europe struggles to boost the Euro’s global influence

Christine Lagarde, ECB president, has highlighted what she calls a “global euro moment”—a chance to increase the euro’s influence amid US dollar dominance and geopolitical uncertainty. Yet efforts to advance the single currency face inertia as EU member states prioritise national interests, defence spending, and political stability.

Proposals for joint euro-denominated debt, a European capital markets union, and a digital euro have stalled. Resistance from major economies such as Germany and France, along with smaller nations concerned about sovereignty, has slowed reforms that could create safe euro assets and centralise market supervision. Without these, the euro remains vulnerable to exchange rate volatility and limited as an international reserve currency.

The euro has risen around 13% against the dollar this year, reflecting investor optimism, but its global share of reserves remains around 20%, far behind the dollar’s 60%. While a digital euro and expanded supervisory structures could strengthen Europe’s financial architecture, legal, political, and technical hurdles are delaying implementation, potentially beyond Lagarde’s term in 2027.

Europe’s challenge is clear: without coordinated reform, the euro’s claim as the global number two currency remains aspirational. Investors and policymakers alike must weigh whether incremental steps—such as promoting financial literacy and capital market access—are sufficient to enhance resilience and competitiveness in an era of rising protectionism and digital currency innovation.

Explore the full analysis for a closer look at Europe’s stalled ambitions and what it means for global markets.