- Europe must boost euro use to cut reliance on dollar-based financial systems.
- Simplified rules and stronger infrastructure can drive investment and innovation.
- Digital euro and euro stablecoins can enhance monetary sovereignty and payments.
Europe must reinforce the international role of the euro and reduce its reliance on dollar-based systems, according to the president of the Deutsche Bundesbank. Speaking in Frankfurt at the New Year’s Reception of the American Chamber of Commerce in Germany, he outlined a strategic shift toward euro-pegged assets, digital payment solutions, and deeper capital market integration.
He argued that rising geopolitical uncertainty and weakening multilateral ties require Europe to secure greater financial autonomy while preserving transatlantic dialogue.
Transatlantic Ties Face New Strains
The Bundesbank chief acknowledged the deep economic links between Europe and the United States. The US remains the largest export market for Germany and the European Union. Moreover, both economies together account for nearly half of global GDP and a significant share of world trade.
However, he noted that recent policy shifts in Washington have introduced uncertainty into the relationship. Consequently, Europe must reassess its strategic position. He stressed that Europe cannot assume the same level of stability in global cooperation as in previous decades.
Besides trade, mutual foreign direct investment underscores the depth of the partnership. Yet he urged European policymakers to address internal weaknesses rather than focus solely on external pressures.
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Simplification and Investment as Growth Drivers
The Bundesbank president emphasized that complex regulations constrain investment and innovation across Europe. Hence, he called for simpler and more uniform rules within the euro area. He supported efforts by European institutions to streamline financial supervision while maintaining stability.
Additionally, he highlighted the need for stronger energy and digital infrastructure. Europe must invest more in renewables and artificial intelligence to boost competitiveness. Moreover, he urged faster progress on the Savings and Investments Union to channel Europe’s high savings into productive ventures.
He argued that deeper capital market integration would help innovative firms access funding more easily. Consequently, Europe could strengthen productivity and reduce economic fragmentation within its single market.
Elevating the Euro’s Global Role
Significantly, he placed strong emphasis on promoting euro-denominated assets and payment systems. He supported ongoing work on a digital euro as a pan-European retail payment solution. Furthermore, he pointed to wholesale central bank digital currency research that could enable programmable payments for financial institutions.
He also expressed openness to euro-based stablecoins for low-cost cross-border transactions. Hence, Europe could reduce exposure to dollarization risks and increase monetary sovereignty.
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