The euro : a lever for global influence

The US dollar has held the unrivalled position of the world's dominant currency since the Second World War. Although the euro has established itself as the second most important currency in the international monetary system, it lags way behind the USD, and does not reflect the dominant position of the EU in global markets. Although the role of the renminbi is even less developed, China is working hard to change that. A possible game-changer, which could lead to more currency diversification, is the rapid development of private and public digital currencies. On this, China is in the vanguard. Why is the euro not more widely used? The main reason is that the economic and monetary union remains incomplete. The unfinished banking union, patchy progress towards a capital markets union and the absence of a central fiscal capacity all make it difficult for the euro to challenge the USD. Other factors include the limited supply of high-quality euro-denominated assets, and the fragmentation of the EU and euro area's voice in international financial institutions. In recent years EU leaders have on several occasions called for a strengthening of the international role of the euro. It has also been pushed by the Commission and supported by the ECB. But the overall objective has remained rather general, with little consideration of why (economic and/or political reasons?) and even less to the how (what policy implications might this entail?).