This progress rests on two foundations.
The first is structural. With last year’s exports worth almost four trillion euros, Europe is the most open large economy in the world. Our determination to uphold the rule of law even under unprecedented pressure, the independence of our central bank, our robust budgetary framework and the openness of our single market represent structural qualities that are no longer ubiquitous.
The second basis is that in the areas in which Europe acted purposefully in the past, it also achieved results. A consistent European framework for green and sustainable financing has led to market leadership
The euro has overtaken the dollar for the first time to become the leading currency in the global green bond market. In addition, instant payments are growing at an exponential rate, which is helped by EU legislation and the pan-European fast payment system operated by the Eurosystem.
Europe cannot afford not to act
We are making progress in the areas where we have taken the necessary decisions. But now even more is needed.
Almost a third of China’s foreign trade is settled in yuan, the share of which was almost zero ten years ago. The share of this currency in the financing of world trade reached eight percent, thus surpassing the euro. And more than 20 percent of French trade with China is now invoiced in yuan.
This development is a reflection of China’s targeted policy to expand the role of its currency in areas where it has economic weight. And this shift is not limited to China. Recently passed United States legislation on dollar-denominated stablecoins supports a focused effort to expand the currency’s network into the digital realm.
Dollar stablecoins are currently only marginal in international payments, representing a fraction of a percent of cross-border flows. However, the intention is to use new technologies to further strengthen this already dominant currency. The world’s largest economies are taking deliberate measures. Europe cannot afford to be the only one not doing this.
The euro will remain in the foreground
The ECB fulfills its role within its mandate by contributing to macroeconomic stability – price stability, financial stability and a healthy banking sector – and ensuring the availability of liquidity in euros.
We recently decided to expand the EUREP program – repo transactions for central banks – in order to support the smooth transmission of our monetary policy. Starting this year, we will provide permanent access to euro liquidity in exchange for high-quality euro-denominated collateral.
By enabling a wider range of central banks around the world to quickly address the risks of a lack of euro liquidity, we will increase confidence in the use of the euro around the world. At the same time, we are at the forefront of efforts to ensure that central bank money is future-ready. In September of this year, we will begin issuing tokenized central bank money to settle wholesale transactions.
We are preparing to supplement cash with its digital equivalent – the digital euro – for everyday payments. In the case of cross-border payments, we are working to link our own fast payment system with those of other countries in a way that respects their sovereignty. Together, these initiatives will ensure that the euro remains at the forefront of technological developments.
But strengthening the broader factors of a currency’s standing – economic strength, geopolitical weight and legal certainty – is a task for EU legislators. Realizing a true single market, savings and investment union, higher productivity and the necessary ability to protect Europe’s external and energy security would increase confidence in its growth potential and resilience.
The EU could also support the euro’s role in invoicing and trade finance, in line with its leading role in world trade. The euro will not automatically gain a stronger international status. It is a question of our decision and corresponding action.
