The European Central Bank (ECB) has reported that the international role of the euro remained stable in 2024, maintaining its position as the second most important global currency. The euro’s share across various indicators of international currency use has held steady at around 19% since Russia’s invasion of Ukraine. This is according to the ECB’s annual review published today.
In a year marked by geopolitical tensions and declining inflation, the ECB began lowering policy rates. Despite these challenges, the euro’s share in global official foreign exchange reserves remained at 20%, unchanged since the start of Russia’s invasion.
Christine Lagarde, President of the ECB, emphasized the importance of upholding the rule of law to maintain global trust in the euro. She noted that while there are no significant changes in its international use currently, vigilance is necessary.
Central banks have been accumulating gold at record levels, and some countries are exploring alternatives to traditional cross-border payment systems. There is also evidence linking geopolitical alignments with shifts in invoicing currency patterns in global trade since Russia’s invasion.
New challenges for the euro include initiatives promoting cryptocurrencies’ global use. This evolving landscape highlights the need for European policymakers to strengthen the euro’s global role by advancing initiatives like the Savings and Investment Union and removing barriers within the EU to enhance market liquidity.
Piero Cipollone, an Executive Board member, said that a digital euro would bolster Europe’s economic security and strengthen its international role. The ECB is also working on solutions for settling wholesale financial transactions using distributed ledger technology and improving cross-border payments between Europe and other regions.
The ECB’s efforts include establishing euro liquidity lines with non-euro area central banks to encourage using the euro in global financial transactions.
Information from this article can be found here.
