BERLIN: The head of the European Central Bank (ECB), Christine Lagarde, said in Berlin on Monday that she was in favour of a stronger euro to help counter the threat posed by the trade dispute with the United States.
The world order that has existed for decades is “fracturing,“ Lagarde said at the Hertie School for governance, reported German news agency dpa.
“Multilateral cooperation is being replaced by zero-sum thinking and bilateral power plays,“ she said. “Openness is giving way to protectionism.”
The “dominant role of the US dollar” was also being brought into question, she argued.
“The changing landscape could open the door for the euro to play a greater international role,“ she said.
According to Lagarde, about 20 per cent of the world’s foreign exchange reserves are held in euros, with the dollar accounting for 58 per cent.
Since Trump announced his global tariff package, the dollar has been under pressure and the euro is stronger against the dollar than it has been for over three years.
This could bring “positive implications” including making loans in the EU more favourable, protecting eurozone countries from exchange rate fluctuations and better protection against sanctions, she said.
“In short, it would allow Europe to better control its own destiny,“ she said.
The grasp these opportunities, Europe needs to keep its commitment to open trade, keep its economic foundations strong and capital markets liquid, and strengthen its legal foundations, Lagarde said.
These goals could be achieved “by uniting politically so that we can resist external pressures,“ she said.
