New indicators of the euro’s global appeal from the euro area international investment position

Prepared by Roberto Gandolfi, Linda Rousová and Martin Schmitz

Published as part of the The international role of the euro, June 2026.

This box presents novel indicators to assess the euro’s global appeal, based on newly available currency breakdowns in the euro area international investment position (IIP). Specifically, the indicators show the currency composition of the euro area’s cross-border assets and liabilities – denominated in euro, US dollars and other currencies – excluding intra-euro area positions. The indicators, which are fully consistent with official ECB data on the euro area IIP, are constructed from the euro area and individual countries’ IIP data, complemented with estimates based on the ECB’s securities holdings statistics and the Bank for International Settlements’ locational banking statistics.^[1]

The new indicators show that around one-third of euro area cross-border assets and two-thirds of liabilities were denominated in euro in 2025, with the remainder largely in US dollars (Chart A, panel a). In that year, both euro area cross-border assets (excluding reserve assets) and liabilities amounted to around €36 trillion.^[2] The lower share of euro-denominated cross-border assets relative to liabilities implies that the euro area is “short” in euro (i.e. the net foreign asset position in euro is negative) and “long” in foreign currencies, most notably the US dollar. This configuration implies that a depreciation of the euro generates valuation gains and positive wealth effects in periods of external shocks accompanied by a depreciation of the euro exchange rate, thereby acting as a buffer for the euro area. While this mechanism is well established in the literature when it comes to advanced economies – including the United States and individual euro area countries – the new indicators provide, for the first time, comprehensive quantitative evidence for the euro area as a whole.^[3]

Focusing on euro area cross-border liabilities, the euro’s share rose from 54% in 2015 to 66% in 2025, suggesting that the currency’s appeal to global investors has been growing over the past decade (Chart A, panel b). The rising share of the euro was broad-based across IIP components and largely mirrored by a decline in the US dollar share.^[4] The euro’s share increased the most in foreign direct investment – by almost 20 percentage points to 52%, albeit from a relatively low initial level. Although the euro’s shares were already high in 2015 for other IIP components, they have increased further over the past decade, reaching 78% in portfolio equity, 71% in portfolio debt and 62% in other investment. The US dollar remains by far the second most important currency in euro area IIP liabilities, although its shares have decreased across all components.

Chart A

Increase in the euro’s global appeal over the past decade

a) Euro area cross-border assets and liabilities by currency	b) Change in currency shares of euro area cross-border liabilities
(EUR trillions)	(percentages)

While foreign direct investment liabilities recorded the largest increase in share, portfolio equity made the largest contribution to the overall rise in the euro’s share since 2015, owing to its larger volume. Euro-denominated euro area cross-border liabilities have expanded by more than €9 trillion over the past decade (Chart B, panel a). Portfolio equity accounted for the largest increase (€4.9 trillion), followed by foreign direct investment (€2.1 trillion) and other investment (€1.9 trillion), while portfolio debt increased only modestly (€0.4 trillion). The growth in portfolio equity liabilities explains more than half of the total 12 percentage-point increase in the euro’s share since 2015 (Chart B, panel b). The growth reflects strong global investor demand for both listed shares and investment fund shares, with the latter accounting for around three-quarters of the overall expansion in portfolio equity liabilities. While euro area listed shares are almost exclusively denominated in euro, this is less the case for euro area investment fund shares. Still, the euro is used as the currency of issuance for the majority of euro area investment fund shares.^[5]

Chart B

Portfolio equity liabilities drove most of the euro’s share increase

a) Euro-denominated euro area cross-border liabilities by IIP component	b) Cumulative changes in euro-denominated euro area cross-border liabilities by IIP component
(EUR trillions; percentages)	(percentages, four-quarter moving average)

Factors such as asset supply, interest rates, trade intensity, business sentiment towards Europe and policy uncertainty may shape the euro’s growing global appeal. The euro’s share in euro area cross-border liabilities (or its IIP components) is positively associated with more ample euro area government debt supply, higher interest rates, more extra-euro area trade and a favourable business sentiment towards Europe, as well as with lower economic policy uncertainty (Chart C).^[6] These results suggest that policies promoting trade openness, an ample supply of safe assets and a predictable, low-uncertainty macroeconomic environment may help boost the euro’s attractiveness as an international investment currency.