Unlocking the Euro’s Unexplored Power on the Global Stage

Fabio Panetta, Member of the Executive Board of the ECB, recently discussed the international role of the euro and its implications for monetary policy. The euro is currently the world’s second most important currency, with a share of around 19% in international currency, behind the US dollar but ahead of other currencies. While the COVID-19 pandemic has reinforced the dominance of the US dollar, the euro has shown strength in areas such as the global green bond market. The ECB has maintained a neutral stance towards the international role of the euro, but acknowledges that changes in its global role can impact monetary policy. The euro’s untapped global potential can be unleashed through deeper Economic and Monetary Union and the advancement of capital markets union. The ECB supports common instruments that generate safe assets for all Member States, such as the proposed €750 billion recovery fund. The ECB has also played a prominent role in managing the global currency during the pandemic crisis, establishing backstop facilities and monitoring the digitalization of money. The ECB is at the forefront of discussions regarding the desirability and feasibility of a central bank digital currency (CBDC), which could have implications for the euro’s international role and global monetary and financial system. The future evolution of the euro’s international status lies in the hands of European policymakers, with the European Parliament playing a crucial role in strengthening confidence in the euro and the European project.

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