ECB: the euro could replace the dollar according to Lagarde

What if the euro finally established itself as a global reference? In Berlin, Christine Lagarde surprised her audience by saying that the single European currency could replace the dollar as the main pillar of international reserves. Behind this daring statement, the president of the ECB sketches a clear strategy: to provide the European Union of levers necessary to weigh financially and geopolitically. Thus, in a world in recomposition, this ambition redefines monetary power relations and places the euro at the heart of a new global balance in gestation.

The euro facing a weakened dollar: a strategic turning point?

Faced with a global dynamic of gradual disengagement of the dollar and the boom in regulations in local currencies, illustrated in particular by the acceleration of this transition within the BRICS, Christine Lagarde has taken a stand.

During a speech delivered in Berlin on “The role of Europe in a fragmented world”the president of the European Central Bank surprised by saying that current geopolitical changes could bring out an unprecedented role for the single currency.

“The current changes open the way at a global moment of the euro”she has declared. She insisted that this dynamic would not be automatic. The euro will not gain in default influence, it will have to deserve it.

Faced with the growing volatility of the dollar, caused by what it describes as “Erratic economic policy” In the United States, investors began to reduce their exposure to the American currency. However, few have chosen the euro as an alternative. “Many have opted for gold instead, not seeing a direct alternative”she recognized.

For Lagarde, this reluctance of investors is explained by clearly identified shortcomings in European financial architecture. The lack of depth of the euro zone capital market prevents the emergence of a solid basis for the internationalization of the euro. The BCE president highlighted several major structural obstacles:

• A persistent fragmentation of the financial markets, which limits the attractiveness of European assets internationally;
• The absence of a safe, pan -European active, equivalent to the American Treasuries, towards which institutional investors could turn in case of turbulence;
• Financial institutions deemed unfinished, due to political reluctance to greater budgetary and banking integration;
• A lack of interest from European governments for a truly federative monetary project, slowing down any collective dynamics.

These structural weaknesses, out of step with the economic weight of the EU, today slow down the ambitions of the Euro on the world scene. Lagarde therefore makes a lucid diagnosis for Europe: without deep reforms, the single currency will remain lagging behind the dollar, even in a world in search of alternatives.

The euro, power currency: when geopolitics invites itself into the monetary debate

Christine Lagarde goes beyond a financial observation. It insists on a condition rarely mentioned in the economic debate: military power as a pillar of monetary credibility.

“Investors, in particular institutional, are also looking for geopolitical guarantees in another form. They invest in the assets of regions which are reliable partners in terms of security and which can honor their alliances by military power ”she said.

This declaration marks a major inflection. In order for the euro to compete with the dollar, the European Union must also assert itself as a credible strategic and security force. In other words, the attractiveness of a currency depends as much on the stability of its transmitter as on its ability to weigh in the world order.

In this perspective, Lagarde evokes several concrete avenues for Europe: to conclude new trade agreements with other blocks such as that of BRICS, improve cross -border payments, and strengthen liquidity agreements between the ECB and other central banks to widen the international use of the euro.

She suggests that the joint financing of public goods could allow the EU to gradually increase its offer of safe assets. A proposal that still strikes certain members such as Germany, reluctant to any budgetary pooling mechanism. However, for Lagarde, this development is necessary if Europe wants to move from the status of an economic block to that of a global player capable of influencing global financial flows, in particular through initiatives such as the scheduled deployment of the digital euro from October 2025, confirmed by the ECB.