Frankfurt (Reuters) – The president of the European Central Bank (ECB) Christine Lagarde renewed her calls to strengthen the role of the euro on a global scale on Tuesday.

The euro, the second most used international currency after the dollar, appreciated this year while investors were trying to move away from the greenback because of political uncertainty, turning to sure values ​​such as gold and first -rate European obligations.

But the market for sovereign debts of the common currency is relatively small compared to that of the United States, which exposes it to a risk of volatility in the event of such flows.

“In a way, we are undergoing the consequences of political decisions taken in Washington and the portfolio allocation choices made on a global scale, without being able to exert a great influence,” said Christine Lagarde from Paris.

“But staying spectators is not an option. We cannot remain a passive refuge, absorbing the shocks created elsewhere. We must make the euro a currency whose fate is in our hands,” argued the president of the ECB.

Critics argue that a larger market share would result in an appreciation of money, an adverse trend that would not benefit exporters.

The latter ensure that the foreign request for reserve assets would lead to a constant influx in the euro zone, which would strengthen the value of the currency and would not only reduce loan costs.

But according to Christine Lagarde, there is no mechanical link and the single market could mitigate these risks by transferring a larger part of her foreign trade to the euro and developing domestic trade.

For the president of the financial institution, the economic difficulties encountered by Europe can be resolved thanks to more daring political initiatives.

“Our lower results are mainly explained by internal barriers: the fragmentation of regulations, tax regimes, bankruptcy procedures, and the incompleteness of the Union of Capital Markets”.

“To this are added structural challenges – high energy costs, low productivity, reluctance to finance common projects – which depend on us largely,” added Christine Lagarde.

(Written by Balazs Koranyi; Zhifan Liu, edited by Kate Entringer)

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