Lack of Safe Assets Weakens Euro Amid Dollar Strength: Gabriel Makhlouf,
a member of the Governing Council of the European Central Bank and Governor of the Central Bank of Ireland,
affirmed that the euro cannot quickly replace the dollar
as a central currency in the global financial system.
He pointed out that the countries relying on the euro still have a long way
to go in terms of financial and economic integration.

Contents

Dollar Dominance

Euro Appreciation

Uncertainty as an Opportunity

Dollar Dominance

Makhlouf explained that while the dominance of the dollar may decline in the long term,
Europe currently lacks a unified financial structure
particularly in terms of safe assets similar to U.S. Treasury bonds,
which form a cornerstone of the American financial system.

Speaking at an economic conference in Aix-en-Provence, France, he stated:
“Frankly, the European economic system has yet to take shape.”

Euro Appreciation Driven by Investor Concerns

Makhlouf noted that recent currency movements,
including the rise of the euro against the dollar,
were largely driven by investor concerns over the rule of law in the United States,
rather than any inherent strength in the euro itself.

He said: “It’s too early to say this will suddenly lead to the euro replacing the dollar
the euro is not yet ready for that.”

A Call to Seize the Moment of Global Uncertainty

Nevertheless, Makhlouf reiterated calls made by many of his colleagues
at the European Central Bank for Europe to seize the current state of global uncertainty
as an opportunity to strengthen its internal security, advance integration within its single market,
and expand joint financing mechanisms to achieve shared goals.

He concluded:
“These are real opportunities to enhance the EU’s position,
and to strengthen its sovereignty and independence—they must not be missed.”

Lack of Safe Assets Weakens Euro Amid Dollar Strength

Lack of Safe Assets Weakens Euro Amid Dollar Strength

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