ECB official Andreas Wunsch highlighted the euro’s potential to expand its global footprint, suggesting structural strength that could underpin currency appreciation over time. The remarks come amid growing scrutiny over the euro’s role in international trade and reserves.
- Euro’s share of global foreign exchange reserves rose to 22.3% in 2025, up from 20.5% in 2022.
- Euro-denominated trade invoices reached 38.7% globally in 2024, up from 35.1% in 2021.
- FXE ETF has gained 6.8% YTD, reflecting growing investor confidence.
- German 10-year bond yields (BUND) have tightened by 12 bps in 2025.
- ECB officials signal a long-term strategic pivot toward strengthening the euro’s international role.
- EURUSD is supported above 1.10 in medium-term outlook due to structural shifts.
ECB policymaker Andreas Wunsch emphasized the euro’s growing potential to serve as a broader global reserve and settlement currency, citing structural advantages in the EU’s economic scale and policy coherence. While acknowledging current reliance on the U.S. dollar, Wunsch pointed to recent trends in trade invoicing and central bank reserve diversification as signs of shifting dynamics. Data from the IMF’s 2025 Triennial Survey of Exchange Arrangements and Reserves show the euro accounted for 22.3% of global foreign exchange reserves, up from 20.5% in 2022. Meanwhile, euro-denominated trade invoices rose to 38.7% globally in 2024, up from 35.1% in 2021—a trend Wunsch described as 'meaningful progress.' These shifts reflect a gradual but measurable shift in the euro’s international standing. The implications for financial markets are significant. A stronger global role could attract long-term capital inflows into eurozone assets, supporting EURUSD above 1.10 in the medium term. FXE, the euro ETF, has gained 6.8% year-to-date, while German 10-year bond yields (BUND) have tightened by 12 basis points, signaling improved risk appetite and confidence in eurozone stability. Market participants are now pricing in a more resilient euro, with forward guidance from ECB officials suggesting a cautious but sustained shift toward policy normalization. This could further differentiate eurozone monetary policy from other major central banks, particularly as inflation remains contained and fiscal discipline holds.