An epochal shift: will the euro become the world's No. 1 currency?

In April 2025, The Economist published an article asking the question: could the euro replace the dollar as the world's number one currency? Against the backdrop of the dollar's weakening position caused by economic and political instability in the US, the euro is seen as a potential contender for this role.

Weakening of the dollar

Since the beginning of 2025, the dollar has fallen 8% against major currencies, reaching a three-year low. Economists attribute this to uncertainty in US trade policy, fears of recession and declining investor interest in US assets. (Dollar has further to fall, says Goldman Sachs chief economist).

Euro potential

The euro is already the world's second largest reserve currency, accounting for about 20 per cent of global reserves, while the dollar holds about 59 per cent. However, to become the world's leading currency, the euro needs to overcome a number of obstacles.

Obstacles in the euro's path

The main obstacle is the lack of a single safe asset similar to US Treasuries. Proposals for a pan-European bond face political resistance within the EU. (Europe can take advantage of King Dollar's wobble).

Global implications

If the euro is able to strengthen, it could lead to significant changes in the global financial system, including a reallocation of central bank reserves and changes in the structure of international trade settlements.

Conclusion

While the euro has the potential to strengthen its role in the global economy, its path to becoming the world's leading currency remains uncertain and depends on political will and economic reforms within the EU.

Sources

- Reuters

- Reuters

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