Euro may replace US dollar as global reserve currency
The euro has the potential to rival the US dollar as the world’s primary reserve currency, though experts caution that internal divisions within the eurozone and the dominance of US financial markets remain significant barriers.
European Central Bank (ECB) President Christine Lagarde recently suggested that the euro could serve as a viable alternative to the dollar, especially in a global economy increasingly shaped by protectionist trade policies.
Jane Foley, head of foreign exchange strategy at Rabobank, said Lagarde’s remarks echoed similar sentiments expressed by German Chancellor Friedrich Merz, who has advocated for reducing Europe's dependence on the United States following recent elections.
Foley noted, “The eurozone’s lack of fiscal cohesion and the strength of US capital markets continue to hinder the euro’s ability to displace the dollar as the global reserve. Still, that doesn’t mean currencies like the euro or China’s yuan won’t gradually erode the dollar’s dominance.”
She emphasized that the ECB’s initiative to increase euro-denominated trade invoicing marks a strategic move toward decreasing reliance on the US dollar.
.png "Advertisement")
