Nagel outlines strategy to bolster global role of euro
Bundesbank President Joachim Nagel has urged European policymakers to strengthen the euro's international standing through a digital euro and deeper financial integration. Speaking in Stuttgart, he noted that the US dollar holds 57 percent of global reserves compared to one-fifth for the euro.
Dollar dominance meets European ambition
At the end of 2025, the US dollar held a 57 percent share of global foreign exchange reserves, while the euro accounted for around one-fifth.
In foreign currency debt, the euro's share rose to around 30 percent, compared with 60 percent for the US dollar.
European Union trade remains heavily dollarized, with exporters accepting US dollars for one-third of exports and half of EU imports priced in dollars.
Bundesbank research indicates that political pressure on the Federal Reserve disrupted financial markets, pushing gold prices up by almost 70 percent during peak turmoil.
Nagel argued that central bank independence, the rule of law, and price stability are indispensable for preserving global trust in the euro.
Building infrastructure for monetary autonomy
To enhance the euro's international standing, Nagel highlighted the creation of a European Savings and Investments Union, including partial centralization of supervision under the European Securities and Markets Authority.
The Eurosystem also made its EUREP repo facility permanently available to provide euro liquidity globally.
Furthermore, the Eurosystem is preparing a digital euro and launching the Pontes project this autumn to deliver wholesale central bank money via distributed ledger technology.
Technical fixes miss the political core
Nagel accurately diagnoses Europe's strategic vulnerability in a fragmented monetary order.
Yet technical initiatives like digital currencies cannot displace the dollar without genuine fiscal unity.
Real monetary sovereignty demands deep capital market integration that member states continue to delay.