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