European Central Bank President Christine Lagarde has called on Europe to take advantage of a unique moment to elevate the euro’s status on the global stage. Speaking amid growing doubts about the US dollar’s reliability under Donald Trump’s erratic policies, Lagarde described this as a chance to promote a “global euro,” urging European leaders to act united and decisively to control their financial future.

In an op-ed for the Financial Times, she stressed that three core pillars must be strengthened for the euro to gain international prominence: geopolitical credibility, economic resilience, and strong institutions. Lagarde highlighted Europe’s position as the world’s largest trading bloc - being the primary trading partner for 72 countries and accounting for nearly 40% of global GDP. This translates into the euro’s current role as the currency behind about 40% of international invoicing. She argued that Europe should leverage this advantage by negotiating new trade agreements to expand the euro’s influence.

Lagarde and other European policymakers view this period as an opportunity to challenge the decades-long dominance of the US dollar. A stronger euro could grant Europe benefits traditionally associated with the dollar, such as lower borrowing costs, protection from currency volatility, and insulation from sanctions. The trend is already visible: since early 2025, investors have begun to shift away from the dollar, unsettled by the US administration’s unpredictable trade policies. Meanwhile, interest in European capital markets has grown, partly due to increased public spending, notably in Germany. Despite this, officials remain cautious, concerned that a sudden collapse of the dollar could destabilize global markets.

Yet, progress remains slow. An ECB report recently revealed that the euro’s international use is expected to stay flat through 2024, highlighting the difficulty of competing with the entrenched dollar. Lagarde noted that the euro’s rise won’t happen by chance - it must be earned. Current skepticism about the dollar has not yet sparked a major move toward alternatives but instead increased gold demand.

The ECB president emphasized that being a global reserve currency entails responsibilities. To avoid liquidity shortages abroad, the ECB is expanding swap and repo lines with key partners to ensure smooth monetary policy transmission. Still, she pointed out that trust is grounded in tangible realities: investors favor regions that uphold alliances and show reliability. Europe’s ongoing efforts to rebuild its geopolitical strength should boost confidence in the euro’s future.

Economic strength, she noted, is the foundation of any international currency. Successful issuers demonstrate robust growth to attract investment, deep capital markets to handle large transactions, and plentiful safe assets. Europe, however, faces significant structural hurdles. Its growth remains modest, capital markets are fragmented, and despite a relatively strong fiscal position (with debt at 89% of GDP compared to the US’s 124%), it lacks sufficient high-quality safe assets. Government bonds rated at least “AA” total less than 50% of EU GDP, while in the US, they exceed 100%. To overcome these challenges, Lagarde called for completing the single market, easing regulatory burdens, and creating a capital markets union. She also urged coordinated support for strategic sectors like green technology and defense. Joint public financing, including for defense, could help generate safer assets and strengthen the euro’s appeal.

The third pillar she outlined focuses on institutional strength. Lagarde acknowledged the EU’s complexity and the difficulty outsiders face in understanding it. Nevertheless, she defended the bloc’s structured, inclusive decision-making system, which provides checks and balances, political stability, and legal certainty. Respect for the rule of law and the independence of key institutions like the ECB are crucial advantages Europe must leverage. To cement these, she proposed reforming EU governance by limiting veto powers and increasing qualified majority voting in critical areas, enabling Europe to speak with a unified voice.

Closing her piece, Lagarde reiterated that shifts in global currency dominance have occurred before and could happen again. This moment offers Europe the chance to claim a “global euro,” but it requires decisive action and unity to secure a stronger role for the euro in the international financial system.