Remarks by Commissioner Dombrovskis at DG ECFIN conference on the International Monetary System and the Role of the Euro

Dombrovskis on the international role of the euro

The Western Australian Museum in Perth houses an unexpected treasure: A remarkable collection of 17th-century Dutch silver coins, recovered from the Batavia, a flagship of the Dutch East India Company.

Setting out on its maiden voyage in 1629, it carried 250,000 guilders in twelve wooden chests, destined for the spice markets of Java.

It never arrived, striking a reef and sinking thousands of kilometres from home.

Today, its treasures serve as a reminder that a European currency with global reach is nothing new.

Indeed, the Dutch guilder was the first truly global reserve currency, accepted as readily in Manhattan and Jakarta as it was in Delft and Utrecht.

It earned this status through three key strengths: a global footprint, backed by a vast trading network, the credibility that comes from trusted institutions, and a remarkable capacity for financial innovation.

While the world has changed almost beyond recognition since those coins were minted, the essential features that determine a currency's global status have not.

Good morning, ladies and gentlemen.

It is a pleasure to join you for today's conference on the International Monetary System and the Role of the Euro.

I would like to take this opportunity to share my thoughts on why the euro is well positioned to fulfil its potential as a truly global currency, and why that objective is both necessary and urgent.

Today's world has grown more challenging and less predictable for reasons that we are all familiar with.

Once, crises interrupted stability.

Now, brief periods of stability seem to punctuate one crisis after another.

Of course, disruptions to the status quo also create opportunities.

Including for our common currency.

During periods of market turbulence, the US dollar has typically acted as a global safe haven, attracting investors seeking the perceived shelter of US markets.

Yet, something unusual happened following Washington's announcements on the imposition of a very broad package of tariffs in April 2025.

The dollar fell. While US Treasury yields rose sharply.

This is the opposite of what usually happens to the world's reserve currency in a highly uncertain environment.

All of this does not rewrite the rules of global finance, of course.

But it was very widely noticed and characterised by some as a “reserve currency shock.”

This episode may be taken as a signal, perhaps, that investors are open to seeking alternative safe havens.

Today, the euro is already well established as the world's second most important currency, after the dollar.

It accounts for roughly 20% of official foreign exchange reserves, around 25% of all foreign currency denominated debt issuances, And the euro's share of global export invoicing, at more than 40%, remains as large as the share of the US dollar.

This prominence has not come about by accident.

It reflects our common currency's fundamental strengths.

But the euro can play an even stronger role on the world stage, and act as a credible alternative for those looking to reduce their exposure to a single dominant currency.

It has what it takes to go truly global, backed by three broad strategic assets: resilience at home, reach across the world, and a readiness to meet tomorrow's challenges.

Allow me to explore each of these elements in turn.

Beginning with resilience.

The euro is backed by economic scale.

The EU's Single Market brings together 450 million consumers and 26 million companies.

With a GDP of €18 trillion, the European Market is the second largest economy in the world, accounting for almost 18% of the global economy.

A large, competitive economy underpinned by strong institutions and macroeconomic stability provides an essential foundation of a stronger international role for the euro.

The euro is backed by trusted institutions.

Investors can rely on Europe's commitment to the rule of law, the independence of our monetary institutions and the impartiality of our statistical authorities.

At a time when the liberal order is being challenged around the world, this provides the euro with a key comparative advantage.

The euro is also backed by a stable macroeconomic environment.

The determined efforts to address weaknesses in the architecture of our economic and monetary union in the aftermath of the financial crisis paid off.

These reforms have been complemented with a new fiscal framework that further strengthens the sustainability of our public finances.

In recent years, the European economy has successfully navigated a series of near unprecedented shocks without the euro's integrity ever being called into question.

Stable and sound public finances underpin the attractiveness of the euro and provide the basis for an increase in the supply of high-quality euro-denominated sovereign debt.

Of course, more remains to be done to build on these strengths and further enhance Europe's resilience.

Much more.

We must maintain our commitment to sustainable public finances, even as we are faced with new and pressing spending needs.

We must double down on boosting competitiveness, improving the regulatory environment and removing the remaining barriers that still fragment our Single Market.

This is especially True when it comes to creating a more unified, liquid and efficient European capital market.

And we must not forget that in a more dangerous world, it remains critical that Europe delivers on its commitment to take responsibility for its own defence.

A currency cannot sustain global reserve status without the hard power to back it up.

For investors, a currency that can be defended is a currency that can be fully trusted.

Second, global reach.

The rules-based international order that powered global prosperity for decades is under severe strain, to put it mildly.

Openness is giving way to protectionism.

Multilateralism is in retreat.

But at a time when others are erecting barriers, Europe is building bridges.

We remain open for business, for new and existing partners alike.

The EU is already the world's largest trade bloc, accounting for an estimated 15.8% of world trade in 2024, and the top trading partner for 80 countries.

This year alone has seen the conclusion of major new trade agreements such as with Mercosur and India.

The EU and its Member States are the largest global provider of Official Development Assistance, accounting for 42% of global development assistance in 2022 and 2023.

That percentage is likely to increase significantly as other powers significantly cut their aid budgets.

And the €300 billion Global Gateway investment programme will deepen our ties with Sub-Saharan Africa, Asia, the Pacific, Latin America, and the Caribbean in the years ahead.

These relationships serve more than commercial and humanitarian goals.

They extend Europe's presence, reinforce our partnerships, and advance our interests.

They provide the essential global footprint that encourages the use of the euro in international transactions.

And send a signal to the world that the euro is a currency that is backed by a power guided not by transaction or exploitation, but by mutual benefit.

So, the EU remains firmly committed to open and rules-based trade, investment and international cooperation.

Addressing the risks that come with this openness is key to preserving it.

A stronger international role of the euro can underpin our efforts to enhance the EU's economic security.

When more countries hold euro reserves or settle trade in euros, they acquire a structural stake in stable, positive relations with the EU.

A stronger international role for the euro grants us greater leverage and a powerful addition to our diplomatic toolkit.

Let me turn, finally, to the euro's readiness to meet the future.

Today, we are preparing to make the most significant step forward since the euro was launched.

The digital euro, issued and backed by the ECB on European technology, will provide our currency with a digital monetary anchor while reinforcing the EU's strategic autonomy through a sovereign, pan-European payment system.

Technological change is reshaping finance at pace.

The euro must keep up and position itself as a currency ready and able to move with the times.

The focus must now be on completing the legislative work for the digital euro and accelerating our preparatory steps.

Ladies and gentlemen, we do not seek a greater international role for the euro for its own sake.

It means lower borrowing costs for European governments, businesses, and households.

It means reduced exposure to exchange rate volatility.

It means insulation from the use of financial channels as instruments of political coercion.

In short, it enhances Europe's strategic autonomy: our ability to act in our own interests, on our own terms, without dependence on the infrastructure or goodwill of others.

It is a crucial tool to ensure Europe can still choose its own destiny.

That it can still be a shaper of world events, rather than resign itself to merely being shaped by them.

There are those who have expressed fears that a stronger international role for the euro will necessarily result in a stronger exchange rate.

We must continue the process of integrating our financial markets so that they are deep enough to absorb inflows from investors seeking a safe haven.

There is no convincing evidence of a long-term link between a currency's share of global foreign exchange reserves and its real effective exchange rate where those deep markets exist.

Look at the dollar. It has remained the world's global reserve currency in times of strength and weakness thanks to the unrivalled depth of US financial markets.

Ladies and gentlemen, to conclude. The world is changing.

We live in an era where beliefs that were once taken as articles of faith can be quickly discarded.

The guilders washed ashore from the Batavia's ill-fated voyage tells us that, just like everything else, the status of global currencies can rise and fall.

Today, the euro has what it takes to go global.

The foundations are there.

Now is the moment for the euro to take its natural next steps and develop a global role that finally reflects its political, economic and financial weight.

Thank you.