Christine Lagarde, president of the European Central Bank (ECB), recently assessed that the strength of the euro and the weakness of the dollar are associated with a decline in global confidence in U.S. policy and that this could actually present an opportunity for the European economy.
President Lagarde noted in an interview with the French newspaper ‘La Tribune du Dimanche’ on the 17th (local time) that “the greater the uncertainty, the stronger the dollar should be, as it is seen as a safe asset; however, recently it is the euro that has shown strength,” adding that “some market evaluations indicate that this is due to the uncertainty of U.S. policy and loss of confidence,” according to Bloomberg.
She emphasized that “this counterintuitive situation could represent an important opportunity for Europe beyond a simple threat,” stating that “Europe is recognized as a stable economic zone with a sound currency system and an independent Central Bank.”
President Lagarde particularly praised the potential for integration in the European economy, saying, “A strong foundation for promoting the digital euro and a single capital market is being established during my tenure as ECB president.”
Voices emphasizing the strengthening of the euro’s international status are continuing within the ECB. Luis de Guindos, vice president of the ECB, stated, “If Europe strengthens its integration efforts, the euro could become a long-term alternative to the dollar,” while Isabel Schnabel, an executive board member, mentioned that “now is a historical opportunity to expand the international role of the euro.”
In response to a question about U.S. President Donald Trump’s attack on the Federal Reserve (Fed), President Lagarde said, “The autonomy of monetary policy institutions must be respected,” warning against potential political interference.
Regarding the European economic situation, she stated, “I am not pessimistic at all,” adding that “employment is stable, purchasing power is increasing, and inflation is decreasing.”