The Euro at a Crossroads: Challenges and Opportunities in a Changing Global Currency Order
In a keynote speech, Thorsten Beck discusses the limited global role of the euro and the challenges it faces in becoming a true alternative to the US dollar.
Since its launch in 1999, the euro was expected to become a major global reserve currency, but its international role has remained below 20% and even declined after the global financial crisis. In contrast, the US dollar remains dominant due to deep and liquid financial markets, strong institutions, geopolitical influence, and powerful network effects that reinforce its global use.
The euro area, by comparison, suffers from fragmented capital markets, the absence of a unified safe asset comparable to US Treasuries, and weaker geopolitical cohesion. Legal and institutional differences across EU member states further limit its attractiveness as a global currency.
However, the speech also highlights that the dollar’s dominance may be increasingly challenged by rising fiscal risks, political instability, and questions over institutional independence in the United States. These developments could gradually weaken global trust in the dollar over time.
To strengthen the euro’s international role, Europe must deepen its capital markets, create a common safe asset, maintain strong institutional standards, and develop independent payment and financial infrastructures, including digital payment innovations and central bank initiatives. Strengthening the euro is closely tied to building a deeper and more integrated European financial system, including the proposed Savings and Investments Union.
The speaker concludes that the euro area stands at a strategic crossroads: while global currency leadership is shifting, the euro can only expand its role if Europe overcomes internal fragmentation and builds a more unified, resilient financial architecture.
