June 6, 2025 | Source: Investing.com
In recent years, the Euro (EUR) has attracted attention as a potential global reserve currency. This trend is driven by growing distrust toward the U.S. Dollar (USD), confidence in the EU’s economic stability, and trust in its legal framework.
Geopolitical risks, U.S. fiscal uncertainty, and a move toward a multipolar currency system have encouraged currency diversification in foreign reserves and international trade settlements.
Australian investment bank Macquarie notes that while the Euro is the “next best thing,” it falls short in several prerequisites required to replace the U.S. Dollar.
The key requirements for a global currency, according to Macquarie, include:
Macquarie points out that while the U.S. struggles with “institutional erosion and policy uncertainty,” the EU maintains an orderly framework based on the rule of law.
However, in terms of multifactor productivity (MFP) and labor input, the U.S. still leads, demonstrating greater economic performance capacity.
The current global currency share (as of 2025) is as follows:
While the Dollar still holds overwhelming dominance, the Euro is clearly establishing itself as the world’s second most influential currency.
Macquarie ultimately concludes that “there is no immediate substitute for the USD,” but emphasizes that “even a 5–10% shift could significantly impact valuations across asset classes.”
The key moving forward will be the ECB’s progress in financial market integration, capital market cooperation across the EU, and the development of alternative global payment systems.
This article analyzes the Euro's potential to become the next reserve currency, focusing on capital mobility, market integration, and payment infrastructure. Macquarie notes that the USD still has no immediate replacement, but even a small shift in reserve allocation could have a major market impact.
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