Euro second most widely used currency globally after US dollar

“Following the pandemic, the euro area has experienced one of the steepest recoveries in its history, thanks also to ample fiscal and monetary policy support. Now we face rising global inflation driven by higher energy costs, supply bottlenecks and normalising demand as economies reopen. On balance, however, these developments have not resulted in a significant change in the international role of the euro,” said ECB president Christine Lagarde.

The share of the euro in global foreign exchange reserves increased by 0.5 percentage points to 20.6 per cent in 2021, and the share of the euro in international bond issuance rose by almost 3 percentage points to 24.6 per cent. Outstanding international loans and outstanding international deposits also increased markedly. However, the share of the euro in foreign exchange settlements declined. The share of the euro in the outstanding stock of international debt securities, as well as in invoicing of extra-euro imports and exports, remained broadly stable.

Looking ahead, the international role of the euro will be primarily supported by a deeper and more complete Economic and Monetary Union, including advancing the capital markets union, in the context of the pursuit of sound economic policies. The Eurosystem supports these policies and emphasises the need for further efforts to complete Economic and Monetary Union, the ECB said.

ALCHEMPro News Desk (KD)