European Central Bank - Euro has proven itself in the crisis

During the Corona crisis, the euro maintained its status as the world's second most important reserve currency, despite losses. At the end of 2020, the common currency had a global share of 21,2 percent - a decrease of 0,7 percentage points within a year, as the European Central Bank (ECB) announced on Wednesday.

The world's leading reserve currency remained the undisputed dollar last year with a global share of around 59 percent. From the point of view of the ECB, the introduction of a digital euro could strengthen the back of the common currency internationally.

Resilient, but not attractive enough

Despite the shock of the pandemic, the global position of the euro has proven to be relatively resilient, unlike during the euro sovereign debt crisis, said ECB President Christine Lagarde. The global attractiveness of the common currency remained rather low. This suggests "that only more resolute political steps and reform efforts would allow the euro to realize its global potential," she said.

From the ECB's point of view, the introduction of a digital euro could also give a boost. The global attractiveness of currencies depends primarily on fundamental economic factors - digitization is unlikely to change that, the central bank said. But the features that are important for digital payment methods, such as low costs, bundling effects and security, could promote the international acceptance of a currency. According to the ECB, the most important thing is the specific design of the digital currency. The central bank wants to decide around the middle of the year whether to give the green light to a project for a digital euro.

Experts believe that progress in deepening the currency community in particular could lead to the euro gaining even greater international weight. These include, among other things, the completion of the banking union and a much closer integration of the capital markets in Europe. In addition, the euro area has so far not had any joint government bonds. Many countries, such as Germany, reject so-called Eurobonds. (Reuters)