Key facts
- ECB President Christine Lagarde emphasized the need for a Capital Markets Union to bolster the euro's global standing.
- Lagarde highlighted geopolitical instability and reliance on US payment systems as critical issues.
- The EU is progressing with the digital euro, with a key parliamentary vote scheduled.
- The ECB is creating new payment infrastructures to integrate emerging technologies like tokenization.
- Lagarde urged global leaders to discuss the undervaluation of the Chinese yuan.
European Central Bank President Christine Lagarde asserted that establishing a Capital Markets Union is imperative for the euro to ascend as a global reserve currency. She described the initiative as the most critical step in an increasingly unstable geopolitical climate, urging European lawmakers to finalize its completion. Lagarde noted that the euro's rise to global reserve status would not be immediate, emphasizing that historical reserve currencies possessed the capacity to defend themselves militarily. The current geopolitical landscape has intensified discussions within the EU about expanding the euro's global role and reducing dependence on US payment infrastructure. Data revealed that US companies Visa and Mastercard control 61% of card payments within the eurozone and nearly all cross-border transactions. To counter this reliance, the EU is advancing the digital euro, a central bank digital currency expected to receive legislative approval by the end of 2026, with a significant vote pending in the European Parliament. In parallel, the ECB introduced a new payments strategy, which includes the development of two network infrastructures designed to incorporate emerging technologies such as tokenization and distributed ledger technology (DLT). Lagarde identified the development of these infrastructures, alongside the digital euro and capital markets reform, as pressing priorities. The ECB's strategic push is also a response to the growing influence of privately issued stablecoins. Lagarde also urged global leaders to discuss the undervaluation of the Chinese yuan, citing International Monetary Fund research indicating that the Chinese currency was 15-16% undervalued. She dismissed the notion of a new Plaza Accord to strengthen the yuan, however, saying the 1985 international deal to weaken the dollar was struck when 'times were different'.