Lagarde demands that the euro has to become globally stronger - progress necessary!

Lagarde demands that the euro has to become globally stronger - progress necessary!

The European Central Bank (ECB) led by President Christine Lagarde takes measures to strengthen the international role of the euro in a new initiative. Lagarde advocates that Europe plays a more active role on the global stage in order to weaken the influence of the US dollar. As [oe24] (https://www.oe24.at/businesslive/maerkte-boersen-live/starker-euro- against-ezb-pra-praesident-mit-ansage/634873980), Lagarde sees an economic threat to the European community, especially in the USA and criticizes the trend of multilateral cooperation towards bilateral power games.

The euro already has a share of around 20 percent in the global foreign exchange reserves, but Lagarde considers this insufficiently compared to 58 percent that are kept in dollars. A stronger international role of the euro could not only reduce the costs of loans within the EU, but also improve the protection of Europe against economic sanctions. Lagarde emphasizes that the supremacy of the dollar is increasingly uncertain and Europe could get new opportunities through a stronger euro.

economic importance of the euro

exports almost make up a fifth of value creation in Europe and secure around 30 million jobs. Lagarde emphasizes that exchange rate fluctuations would have less influence on the economy if more trade was handled in euros. This change could support internal demand in the EU and make the European economy more resistant.

According to European Parliamentary Working Group, an international currency serves several functions: it serves as a means of payment, invoice unit and value storage. The euro has the potential to grow next to the US dollar in these areas, especially if the efficiency of the European financial markets is increased. The harmonization of the market practices could play a crucial role here.

geopolitical challenges

Lagarde also demands that Europe appear geopolitically, economically and legally more to consolidate the international position of the euro. The current global challenges show that the EU has to become more attractive to international capital through future -oriented trade agreements and increased competition on the financial markets. These steps are crucial in order to position the euro as an anchor currency not only for European countries, but also for medium and Eastern European countries.

The dominance of the US dollar is still strong, but the share of the dollar in the official reserves has dropped from 76.1 percent in 1973 to 58.9 percent in 1996. This development, as explained in the analysis of SWP, shows the progressive diversification of the international currency landscape and at the same time offers an opportunity and challenge for the euro. In order to establish itself as an international currency, the euro not only needs time, but also specific economic and legal reforms.

The starting point is promising: the euro is as strong than in over three years compared to the dollar. Lagarde sees great potential when Europe occurs as a political unity and defends the rule of law. These central demands form the basis for a stronger and more stable currency union that could position the euro as an important international actor.