An ECB report today indicated that the global use of the euro was widely stable last year after a steady decline in the wake of the eurozone debt crisis. However, hopes for increased demand have not been fulfilled.
The euro was launched more than 20 years ago, and has always played a secondary role to the US dollar, although the European Commission has made it a target to strengthen its global role and reducethe eurozone's dependence on the dollar during a period of increasing global trade tensions.
However, the eurozone financial architecture remains incomplete, lacking common safe assets or a deposit insurance system, its banking sector fragmented and its capital markets union incomplete.
In its annual assessment, the ECB reported that the euro accounted for 20.5% of global foreign exchange reserves at the end of last year, up from 20.3% a year earlier, while its share of international debt securities fell to 22.1% from 22.4%.
In international deposits outside the bloc, the euro’s role remained largely unchanged, while its share of international loans increased one percentage point. ECB President Christine Lagarde said: "The recent Covid-19 pandemic confirms that these policies and reform efforts are an urgent necessity, which is essential in raising the attractiveness of the euro worldwide."
The dollar also lost market share over the past decade against other currencies, such as the Japanese yen and the British pound, but the dollar and the euro still account for more than 80% of global foreign exchange reserves.
The ECB said: "The share of the US dollar, the leading global reserve currency, has fallen to its lowest level in two decades, indicating a continuing trend towards a gradual diversification of global reserve portfolios."