As the American dollar faces questions about its dominance, some experts are considering whether Europe’s euro could rise to become a more influential global financial player. Historically, the world’s primary reserve currencies have often come from stable republics or democracies, a pattern that favors the euro given Europe’s institutional strength. The current debate centers on whether the euro, backed by the European Union’s growing economic resilience and strategic initiatives, can shift the geopolitical and financial landscape.

Since its launch in 1999, the euro has been a contender for international reserve status, but it faltered during the Eurozone crisis of the 2010s when European financial institutions struggled with fragmentation, limited safe assets, and low yields on government bonds. These issues dampened demand for euro-denominated assets, leaving the dollar unchallenged at the top of global reserves. However, recent developments suggest a more stable and integrated European financial system, which could enhance the euro’s international profile. The European Central Bank has become a de facto lender of last resort, responding effectively during crises and public health emergencies with large bond-buying programs and support measures.

European institutions now appear more robust, with generous support mechanisms like the EU’s €807 billion pandemic recovery fund and a focus on strengthening banking supervision. At the same time, Europe’s financial markets are becoming more interconnected and attractive to international investors. Notably, the euro is gaining ground in cross-border trade settlements and derivatives, indicating growing usage in global commerce.

Europe’s geopolitical stability and commitment to the rule of law contrast with the political turbulence in the United States. The independence of the euro-area’s central bank and the collective decision-making process among 20 sovereign states offer a resilient framework. With plans to broaden the euro’s reach through digital currency initiatives and improved cross-border payment systems, Europe might be positioning itself as a more attractive alternative to the dollar, especially as the U.S. potentially turns inward and faces economic policy uncertainties.

However, significant reforms are necessary before the euro can substantially increase its global stature. Countries with high debt burdens will need sustainable economic growth, while those with fiscal room, like Germany and Scandinavian nations, must focus on investment to create more safe euro assets. Developing deeper, more unified capital markets and reducing dependence on the U.S. and China for international finance will be essential. Ultimately, Europe’s opportunity to lead a new liberalized trading order depends on its ability to implement these reforms, but the signs suggest the euro could play a more prominent role in shaping the future of global finance.

The evolution of the euro’s international role reflects broader shifts in geopolitics and global trade—an opportunity for Europe to significantly influence the tomorrow’s financial system, shaping the rules as the continent asserts its economic and strategic independence.