The European Central Bank said in its annual report that the euro’s overall international use climbed to about 20 per cent, signalling broader activity across global markets. Even so, its role in foreign exchange reserves showed no real advance, with the currency still accounting for only around one-third of the dollar’s share.
The report pointed to mixed momentum. Euro-denominated international bond issuance reached a record level, and the euro moved into first place in the worldwide green and sustainable bond market for the first time. At the same time, daily foreign exchange trading in the euro recorded a notable decline, underlining the uneven nature of its global progress.
Lagarde Calls for Action to Strengthen the Euro
ECB President Christine Lagarde said the current environment offers a chance to expand the euro’s international standing, but only if European policymakers match ambition with concrete action. She stressed that stronger economic resilience, dependable legal and institutional foundations, and geopolitical credibility will be essential if the euro is to become more attractive globally.
The ECB also made clear that achieving this will not be easy. With geopolitical tensions still elevated, central banks continued building gold reserves. Although purchases eased from 1,000 tonnes in 2024 to 850 tonnes, gold remained the world’s second-largest reserve asset by market value.
Fragmentation Pressures and Rising Renminbi Use
According to the report, another challenge comes from the growing development of alternative cross-border payment systems, including those built on digital technologies. The ECB described this as a sign of increasing fragmentation in the international monetary system.
It also noted that China’s renminbi still holds a relatively limited position overall, yet its use has increased visibly in areas such as daily foreign exchange trading and trade finance. The ECB warned that conflict in the Middle East could accelerate this trend further, potentially adding to competitive pressures on established international currencies.
The report repeated its call for a defined timetable to complete the savings and investment union. Lagarde also renewed support for additional steps, including the joint financing of public goods, arguing that such measures could help create a safe and liquid pool of EU public debt. That proposal, however, remains politically sensitive in several member states, especially Germany.
