ECB President Christine Lagarde reiterated her call for a strengthened role for the euro.
European Central Bank President Christine Lagarde reiterated calls for the euro to strengthen its global role, arguing that the bloc is now an innocent bystander subject to shocks in Washington and elsewhere. The euro, the world's second-most-used currency after the dollar, has surged this year as investors fled the US currency amid policy uncertainty and turned to safe assets such as gold and top European bonds. However, the 20-nation currency bloc's investment-grade government bond and equity markets are relatively small compared to the United States, so the bloc is at risk of volatility in the event of such flows. “We are naive spectators to policy decisions made in Washington and portfolio allocation decisions made around the world, over which we have little influence. This is not a sustainable position. We cannot continue to be a passive safe haven, absorbing shocks created elsewhere. We must be a currency shaping its own destiny,” Lagarde said.
