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ECB Report Shows Moderate Rise in Euro's International Role

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ECB Report Shows Moderate Rise in Euro's International Role

The European Central Bank (ECB) released a report on June 2, 2026, stating that the international role of the euro increased moderately in 2025, reinforcing its position as the world's second most important currency. The euro's share across a broad set of indicators of international use rose to around 20%.

Key Findings

The ECB report highlights several key developments in the international use of the euro. Issuance of international debt in euro reached its highest level since the introduction of the single currency, rising by around 30% compared with 2024. The euro also became the leading currency in the green and sustainable international bond market for the first time. Foreign portfolio inflows to the euro area were close to historical highs.

Economic Assessment

The ECB notes that despite the moderate increase in the euro's international role, signs of fragility are emerging. Central banks have continued to increase gold holdings amid persistent geopolitical tensions, while some countries have advanced alternative cross-border payment systems, including those based on digital technologies. These trends highlight growing fragmentation in the international monetary system. ECB President Christine Lagarde emphasized that for the euro to evolve into a truly global international currency, the euro area must develop deeper, more liquid capital markets.

Market Implications

The report's findings have implications for European financial markets. The increased issuance of euro-denominated international debt and the euro's leading role in the green and sustainable bond market may lead to increased demand for European sovereign bonds and euro-denominated assets. The euro may also benefit from increased foreign portfolio inflows to the euro area. However, growing fragmentation in the international monetary system and the emergence of alternative payment systems may pose challenges to the euro's global appeal.

Forward Guidance

The ECB outlined several steps that European policymakers can take to reinforce the foundations of the euro's global potential. These include completing the savings and investments union under an ambitious timetable, joint financing of public goods to establish a safe and liquid pool of EU public debt, and safeguarding investors' trust in the institutions and policies that underpin the euro. ECB Executive Board Member Piero Cipollone highlighted the ECB's role in underpinning the international role of the euro, including its independence and price stability mandate, its role as the issuer of a currency designed for the digital payment age, and its provision of backstop liquidity to central banks worldwide through the enhanced Eurosystem repo facility (EUREP).

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