Europe faces a critical window to elevate the euro’s global role as geopolitical tensions and US trade unpredictability pose new challenges, prompting urgent reforms and strategic shifts across the continent.

Europe’s chance to boost the euro’s role as a global currency is shrinking, and urgent steps are needed if they want to make the most of the current geopolitical and economic environment. François Villeroy de Galhau, the Governor of the Banque de France, emphasized this point while speaking in Luxembourg. He pointed out that Europeans need to implement reforms by a firm deadline—he even suggested January 1, 2028—to prevent missing the strategic window, especially given the increasing uncertainties around the stability of the US dollar.

Now, this period of volatility mainly comes from unpredictable US economic policies. You know, the kind of erratic moves like several trade tariffs slapped on various countries under the previous US administration, which really shook investor confidence in the dollar. Villeroy suggested that Europe should consider strengthening trade links with nations hit hardest by these US tariffs—think India, Switzerland, and Indonesia—and shifting more of that trade settlement into euros. Not only would this help promote the euro as a true international currency, but it would also help Europe diversify its economic partnerships, moving away from its traditional US-based dependencies.

At the heart of this push for a stronger international role for the euro is a multi-pronged approach. The European Central Bank (ECB) might broaden euro liquidity lines to central banks outside the eurozone as a way of encouraging wider use of the currency. They’re also looking into issuing a digital euro and improving the ECB’s wholesale payment system—so it can handle transactions in currencies from key trading partners like the UK, Canada, Brazil, and India. Villeroy also highlighted the need to address Europe’s shortage of liquid, safe assets. One idea is to merge existing supranational debt and transform sovereign debt into unified European instruments. Other measures would include increasing venture capital, establishing a unified European oversight framework for investment funds, and creating a pan-European regulatory regime to reduce the friction caused by the different national rules companies face.

Now, these recommendations are coming at a time when, despite trade tensions and US tariffs, the eurozone economy has shown some resilience. ECB President Christine Lagarde has noted that inflation remains manageable and that the economy has been performing better-than-expected given the global trade challenges. The euro’s relative stability has been helped by Europe’s generally non-retaliatory stance on US tariffs, along with a strengthening euro and a trade deal with the US that caps tariffs at 15%. These factors together helped reduce supply chain disruptions and kept inflation shocks more under control.

That said, this resilience might give a false sense of security—because the risks lurking beneath are significant, especially thanks to unpredictable US trade policies. ECB officials like Bundesbank President Joachim Nagel and Vice President Luis de Guindos have warned that tariffs and trade tensions can mess with economic forecasts, threaten global stability, and even lead to a weakening euro. These uncertainties make it trickier for the ECB to decide on monetary policy. Markets are buzzing with speculation that interest rates might be cut in response to slower growth in the eurozone and increased inflation volatility.

Adding to the complexity, Villeroy mentioned that the US itself faces recession threats—trade wars and all—that could dampen global confidence and growth. Europe might dodge the worst effects, but research suggests the eurozone’s GDP could fall at least 0.25% in 2025. So, it’s pretty clear that the impact of American protectionism isn’t just a US problem—it’s a global concern.

In light of all this, Europe’s goal to raise the euro’s prominence worldwide is both timely and ambitious. Pushing forward with deeper integration—financially, regulatory-wise, and diplomatically—is more important than ever. It’s about capturing a larger slice of international trade invoicing, boosting currency reserves, and strengthening the eurozone’s economic stability and strategic independence. Villeroy’s call for quick, decisive reforms really signals a broader sense of urgency felt throughout Europe’s financial and political circles. The idea is to go from reacting to these external shocks to actively shaping the future of the global currency landscape.

References:

Source: Noah Wire Services

Verification / Sources

  • https://us.fashionnetwork.com/news/Expanded-ties-with-countries-hurt-by-us-tariffs-could-bolster-euro-s-global-role-ecb-s-villeroy-says,1770181.html - Please view link - unable to able to access data
  • https://www.reuters.com/world/americas/expanded-ties-with-countries-hurt-by-us-tariffs-could-bolster-euros-global-role-2025-10-02/ - Francois Villeroy de Galhau, head of France's central bank, urged Europe to act swiftly to strengthen the euro's global standing, warning that the current favorable conditions—due to diminishing confidence in the US dollar from erratic U.S. economic policies—may not last. Speaking in Luxembourg, he emphasized a deadline, suggesting reforms be enacted by January 1, 2028. Villeroy proposed leveraging trade relationships with countries impacted by U.S. tariffs, including India, Switzerland, and Indonesia, by conducting trade in euros. He also recommended expanding euro liquidity lines to non-euro zone central banks and enhancing the ECB’s wholesale payment system to accommodate more foreign currencies. Other strategies include introducing a digital euro, creating a centralized European sovereign debt framework, developing pan-European financial regulations, and boosting venture capital to create a more robust financial ecosystem for the euro. (reuters.com)
  • https://apnews.com/article/b005c0c99547b6f3d08f4f6fa71d3cd2 - European Central Bank President Christine Lagarde reported that the eurozone economy is performing better than anticipated despite the impact of U.S. tariffs introduced by President Donald Trump. Speaking at a central banking conference in Helsinki, Lagarde credited the region’s resilience to a non-retaliatory stance on tariffs, a stronger euro, and a July trade agreement with the U.S. that capped tariffs at 15% and reduced uncertainty. These measures, along with pro-growth government actions, helped limit inflationary impacts and supply chain disruptions. (apnews.com)
  • https://www.reuters.com/business/euro-zone-inflation-risk-quite-contained-lagarde-says-2025-09-30/ - European Central Bank President Christine Lagarde stated that inflation risks in the euro zone remain "quite contained," despite concerns from U.S. tariffs. Speaking in Helsinki, Lagarde noted that the euro zone economy is performing better than expected under current trade tensions, allowing the ECB to maintain interest rates at 2% since June with no immediate plans for change. Policymakers see December as the earliest possible date for reviewing additional support measures. Contrary to forecasts, trade disruptions have been minimal, aided by increased government spending, the absence of EU retaliation, and a strengthening euro, which offset the anticipated shock. Lagarde emphasized that U.S. tariffs did not generate inflationary pressures and highlighted that uncertainty was mitigated by a quicker-than-expected trade deal. Additionally, a rise in government defense investments is projected to contribute 0.25 percentage points to growth between 2025 and 2027, helping to balance out one-third of the trade impact. (reuters.com)
  • https://www.reuters.com/markets/europe/trump-tariffs-endanger-global-stability-bundesbank-says-2025-04-03/ - European Central Bank (ECB) officials have warned that President Donald Trump's recent imposition of significant tariffs on key trade partners, including a 20% tariff on the EU and even higher rates on Japan, South Korea, and Taiwan, threatens global economic stability. Bundesbank President Joachim Nagel criticized the U.S. administration’s move, emphasizing that it undermines international alliances and is likely to hinder global growth and raise inflation volatility. ECB Vice President Luis de Guindos echoed these concerns, highlighting the unpredictability such tariffs inject into economic forecasting due to potential euro depreciation, increased import costs, and disruptions to global trade. While higher defense spending could spur demand and further impact prices, reduced demand for euro zone exports would dampen growth and inflation. Financial markets now expect the ECB to cut rates, with an 80% likelihood in April and further reductions anticipated later in the year. Nagel concluded that the tariffs attack mutual prosperity and could result in economic setbacks for all involved, particularly for the U.S. economy. (reuters.com)
  • https://www.reuters.com/business/finance/us-could-dip-into-recession-trade-war-french-central-banker-says-2025-04-23/ - French central bank chief Francois Villeroy de Galhau warned that the United States risks entering a recession due to the ongoing global trade war, which is also negatively affecting global economic confidence, investment, and output. Speaking at the Atlantic Council in Washington, Villeroy emphasized that the U.S. economy faces the greatest impact from recent trade measures and unpredictability, which he described as a major negative global shock. Though the euro zone's economy may experience less severe consequences, it could still suffer a reduction of at least 0.25% in GDP for 2025. Villeroy downplayed inflation concerns, suggesting that the overall impact of the trade war might lower prices rather than raise them, particularly in Europe where he sees no current inflationary risk. He also cautioned against undermining central bank independence, which has been under scrutiny following U.S. President Donald Trump's recent criticisms of Federal Reserve Chair Jerome Powell. Villeroy commended Powell's conduct, praising him as a model central banker. (reuters.com)

Noah Fact Check Pro

The draft above was created using the information available at the time the story first emerged. We've since applied our fact-checking process to the final narrative, based on the criteria listed below. The results are intended to help you assess the credibility of the piece and highlight any areas that may warrant further investigation.

Freshness check

Score: 10

Notes: ✅ The narrative is fresh, with the earliest known publication date being October 2, 2025. (reuters.com)

Quotes check

Score: 10

Notes: ✅ No direct quotes were identified in the provided text, indicating potential originality or exclusivity.

Source reliability

Score: 10

Notes: ✅ The narrative originates from Reuters, a reputable news organisation, enhancing its credibility.

Plausability check

Score: 10

Notes: ✅ The claims align with known positions of François Villeroy de Galhau, Governor of the Banque de France, and are consistent with his previous statements on financial sovereignty and the euro's global role. (reuters.com)

Overall assessment

Veredict (FAIL, OPEN, PASS): PASS

Confidence (LOW, MEDIUM, HIGH): HIGH

Summary: ✅ The narrative is fresh, originates from a reputable source, and presents plausible claims consistent with known positions of François Villeroy de Galhau, indicating a high level of credibility.