ECBs Lagarde from the text from a speech to be delivered in Germany
Current ECB Policy
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Lagarde did not directly address ECB interest rate policy or inflation in this speech.
Economic Outlook for Europe
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Global fragmentation and the shift away from multilateralism pose risks to Europe’s export-dependent economy:
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Warned that protectionism and dollar instability could harm European growth.
Comments on the Euro
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The euro is currently the second global reserve currency (20% share), far behind the U.S. dollar (58%).
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Lagarde sees opportunity for a “global euro moment”:
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Reducing exposure to exchange rate risk
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Lowering borrowing costs for governments and businesses
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Shielding Europe from external coercion and sanctions
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But warns the euro won’t gain reserve status by default — it must earn it through:
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Geopolitical credibility: strong trade networks and military alliances
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Economic strength: robust growth, deeper capital markets, and more “safe assets”
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Legal/institutional trust: rule of law, ECB independence, and political unity
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Strategic Recommendations
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Strengthen trade by expanding EU agreements and emphasizing win-win partnerships.
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Develop capital markets to match U.S. Treasury market scale and liquidity.
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Build safe assets through common European financing and fiscal unity.
Conclusion
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Lagarde sees the shifting global order as both a risk and an opportunity.
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The EU can position the euro as a true global currency, but this requires deliberate reform, integration, and unity.
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The ECB will play a supporting role, but political and economic cohesion across the EU is essential to seize this moment.
This article was written by Greg Michalowski at www.forexlive.com.
