He euro It could become a viable alternative to dollarwhat would report immense benefits to the 20 nations block, if governments could reinforce the group’s financial and security architecture, he said Monday The president of the ECB, Christine Lagarde.
Experts warn that restless from the erratic American economic policy, World investors were reducing their exposure to dollar assets in recent months, but many opted for gold in placenot seeing a direct alternative.
In fact, The world paper of the euro has stagnant decadessince the financial institutions of the European Union remain unfinished and governments showed little appetite for embarking on greater integration, they expanded.
“The changes in progress open the door to a ‘overall moment of the euro’,” Lagarde said at a conference in Berlin. “The euro will not gain default influence: it will have to earn it.”
To do this, “Europe needs a deeper and more liquid capital market, it must reinforce its legal foundations and need to prop up its commercial opening commitment to security capacities,”Lagarde argued.
Lagarde’s gaze on dollar performance
The role of the dollar has been in decline for years and now represents 58% of international reservesthe lowest percentage in decades, but still well above 20% of the euro.
According to Lagarde, any improvement in the role of the euro must coincide with a greater military strength that can support alliances.
“This is because investors – and especially official investors – also seek geopolitical guarantees in another way: They invest in regions assets that are reliable security partners and can fulfill alliances with hard power“Lagarde said at a conference at Hertie school.
Europe should also turn the euro into the currency chosen by companies to invoice international trade. This could be achieved forging new trade agreements, improving cross -border payments and with liquidity agreements with the ECB.
However, the reform of the national economy can be more urgent, said Lagarde. “The capital market in the euro zone remains fragmented, is ineffective and lacks a truly liquid and widely available active active to which investors can go,”he said.
“Economic logic tells us that public goods must be financed jointly. And this joint financing could lay the foundations for Europe to gradually increase their safe asset offer.”
Joint indebtedness has been a taboo for some key members of the euro zone, particularly Germany, who fears that their own taxpayers end up having to pay for the fiscal irresponsibility of others. If Europe was successful, the benefits would be great, said Lagarde. The influx of investments would allow national agents to borrow at a lower cost, would isolate the block of exchange rates and protect it from international sanctions
Source: Ambito
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