Building the Global Euro A Strategy for Reclaiming Monetary Sovereignty in a Multipolar World

The EU is slowly waking up to a new reality: money has become a key site of geopolitical conflict. From its postwar inception, every step towards European monetary integration has involved further dependence on the US dollar. As a consequence, Europe is today extraordinarily dependent on dollar use for investment, trade and settlement. 30% of EU exports and 50% of imports are invoiced in dollars. Dollar dependence makes the EU vulnerable to the weaponisation of the financial system as an instrument of leverage, coercion, and extortion. Due to growing risks and threats of American sanctions, European banks refuse to provide prominent citizens with bank accounts, be they judges at the Hague’s International Criminal Court or an Italian UN Special Rapporteur. The Chinese RMB, meanwhile, has recently surpassed the euro in key metrics. The EU thus urgently needs a strategy for an increasingly multipolar order.

This report sets out a roadmap for building the euro as a global currency. The report highlights powerful network effects and institutional interdependencies that lock-in dollar use in Europe. It also analyses major institutional obstacles for strategic action across the EU’s multi-level governance structures. Reflecting this political economy diagnosis, the report sets out three key steps for building the global euro: An inter-institutional strategy, a Eurogroup+ Internationalisation Taskforce and a Euro Internationalisation Semester.

The world economy currently uses the dollar because everyone does. Europe as a whole would gain from a shift to the euro, but no single firm or government will pay the price of going first or alone. This collective action trap makes purely market-led adjustment either impossible or excessively slow. We believe reducing Europe’s dollar dependence requires a coherent, cohesive and dedicated strategy. Its goal should not be to replace the dollar altogether — no currency will regain the twentieth-century hegemony the dollar or sterling once held — but to give European firms and governments economically viable and efficient euro-based options for invoicing trade, settling payments, issuing debt and holding reserves.

Europe lacks a strategy, but it has the means. Unlike most jurisdictions, the EU already issues the world’s second currency, on the strength of its size, deep financial markets, legal certainty and open capital account. The United States, meanwhile, is busy undermining the dollar’s dominance. Its fiscal position is reckless, domestic institutions and courts are embattled, the Federal Reserve’s independence uncertain and coercive bargains have replaced multilateralism. Still, despite its highly restrictive capital account, China has so far benefited most from the dollar’s retreat.

The EU needs both a plan and clear governance structures. The same interdependence that holds the dollar in place can work for the euro. Once invoicing, settlement and investment begin to move together, each gain lowers the cost of the next, and adoption starts to carry itself. To get there, the EU needs a political push at the highest level from the European Council and the European institutions in charge.

The study documents three obstacles to building the global euro.

First, building the global euro is a whole-of-government task. It requires coordinated action across payments, investment and trade, each a distinct field with its own priorities, where the euro’s global role is at best a secondary concern. Governance of these fields is split across more than two hundred bodies, from EU institutions and national ministries to central banks and regulators. Moving them together requires a political push none of them can give on their own.

Second, the choices involve trade-offs only politics can arbitrate. Re-ordering the EU payment landscape has important implications for banks and domestic financial institutions. Wider international use of the euro raises demand for euro-denominated safe assets. It might also move the exchange rate, and with it European trade flows and the sectoral composition of the economy. Central banks and financial regulators cannot navigate such trade-offs without political guidance, legislative authorisation, and fiscal backstops.

Third, no institution is accountable for euro internationalisation. Past projects had a clear owner: the Commission led the completion of the Single Market in the 1980s, the Council and the Eurogroup steered the response to the sovereign debt crisis. Building the euro’s international role has none. Expertise sits with the Eurosystem, but central banks are unelected and mandated to deliver domestic price stability only, and have been reluctant to set out a vision reaching beyond that remit. Neither the Commission nor the ECB faces meaningful accountability for the global euro.