France is leading a renewed push within the European Union to elevate the euro’s position as a global reserve currency. A draft statement ahead of the summit on 26–27 June reported by Financial Times, urges EU institutions, including the European Central Bank (ECB), to explore measures that would reinforce the international use of the euro.
Why Now?
This momentum comes amid growing scepticism towards the US dollar, dented by unpredictable trade moves and economic policy under former President Trump. Analysts note that spikes in dollar volatility have prompted some investors to seek alternatives—including gold and non-US currencies .
IMF Director Kristalina Georgieva affirmed that the euro is facing a unique opportunity to claim a larger role globally, pointing out a shortage of high-quality safe assets priced in euros. In recent years, central banks have increasingly turned to gold.
ECB President Christine Lagarde proclaimed this could be a “global euro” moment. However, Europe must reform—especially by increasing its supply of euro-denominated safe assets.
The Safe Asset Gap
Despite a combined euro-area debt-to-GDP ratio of 89%—modest versus the US’s 124%—the EU issues relatively fewer highly rated bonds. Only about half of EU sovereign debt qualifies as AA or higher, compared to over 100% in the US.
ECB Chief Economist Philip Lane highlighted Europe’s “undersupply of safe assets” and suggested that issuing common bonds or converting national bond stock into safer, pooled instruments could help address this imbalance.
The Eurobond Debate
Economists like Olivier Blanchard and Ángel Ubide argue for replacing a portion of national bonds with Eurobonds—joint EU-issued debt—funded by national revenues. Their proposal suggests roughly 25% of national issuance could be shifted to Eurobonds, spurring a euro-denominated asset market akin to the US Treasury market.
France, Spain, and Italy champion this approach, seeing joint borrowing as a way to invest in defence, green transition, and other shared priorities—while avoiding greater national debt burdens.
Political Headwinds
Yet unanimous approval is required for EU-level debt issuance. Germany and the Netherlands continue to oppose Eurobonds, concerned they would shoulder disproportionate repayment burdens.
A senior EU diplomat acknowledged Berlin’s resistance but warned that deteriorating finances in some member states could create more pressure to act.
EU leaders already face €800 billion in joint debt issued under the Covid-19 recovery plan. Annual repayments, projected at around €30 billion from 2028, pose further strain.
Broader Strategy to Boost the Euro
Lagarde’s broader vision encompasses strengthening Europe’s geopolitical credibility, deepening its capital markets, and reinforcing institutional frameworks. The EU must build unity, reduce regulatory fragmentation, and improve growth to support the euro’s global credentials. She has even suggested that reforms such as majority voting on strategic finance issues are necessary for Europe to speak with one voice.
What This Means for Investors and Europe
A strong international euro would bring multiple advantages: lower borrowing costs, less exposure to currency volatility, immunity from dollar-driven sanctions, and deeper, more liquid euro-denominated markets.
Yet execution is complex. The EU must agree on binding reforms while navigating internal divisions. Balancing fiscal responsibility with collective ambition will determine whether this moment is seized—or lost.
Europe at a Crossroads
Europe’s ambition to elevate the euro reflects a strategic move toward financial autonomy. The US dollar’s momentary weakness has opened a window—one that Paris, Brussels, and Frankfurt are eager to exploit. The logic is clear: a deeper, safer, and globally accepted euro would insulate Europe from external shocks and strengthen its geopolitical stance.
But aspiration meets reality in EU politics. Germany’s steadfast opposition and concerns over debt mutualisation are valid. Many voters and policymakers fear unfair burdens or reduced incentives for fiscal discipline. To find consensus, Brussels may need incremental steps—perhaps starting with consolidation of national bonds or limited common issuance—building trust and momentum before taking the leap to full-scale Eurobonds.
Ultimately, success will hinge on Europe’s ability to blend solidarity with sovereignty and appetite for reform. If it succeeds, the euro could assume a new global role—bolstering Europe’s economic resilience and international influence. If it fails, this “global euro” moment may fade, and the dollar’s dominance will persist unaffected.
Europe must decide: is this a turning point, or just another policy idea that never truly materialises?
