The euro currency is gaining ground in an increasingly fragmented global monetary system

At first glance, the figures show a certainly positive situation. In 2025, the euro’s share out of a broad range of international financial indicators rose to 20%. The issuance of euro-dominated debt has reached its highest level since the introduction of the single currency, with an increase of around 30% compared to the previous year. And for the first time, the euro has also taken the lead in the green bond market - that is, bonds linked to environmental sustainability projects. So, is everything all right, then? Not exactly.

The ECB’s annual report on the international role of the euro, published in June 2026 as its twenty-fifth edition, interprets these figures with due caution. Piero Cipollone - a member of the ECB’s Executive Board - says it without ambiguity: the rise of the euro was “due to circumstances, not a strategic choice”. In other words, the euro has benefited more from the turmoil elsewhere (the dollar’s volatility, global geopolitical tensions, the instability of the international financial system) than from its own strength built up over time. Meanwhile, a constantly changing global monetary system persists in the background.

The most telling sign comes from gold. For the first time since the collapse of the Bretton Woods system in 1971, the precious metal has overtaken US Treasuries as the leading asset class in global official reserves. By Treasuries we mean government bonds issued by the US government, which have long been regarded as the ultimate safe-haven asset: safe, liquid and universally accepted. By the end of 2025, gold accounted for 27% of global reserves, whilst Treasuries had fallen to 22%. This figure is a clear signal of a lack of confidence in US stocks. According to the report, gold is mainly bought by the central banks of countries that are most fearful of Western financial sanctions or that feel most exposed to conflict. Since 2022, China has purchased more than 350 tonnes, Turkey 220, and India 130. Poland, a NATO member state bordering Russia and Belarus, was the largest buyer in 2025, purchasing around 100 tonnes.

However, this fragmentation is not limited to the battle between gold and US Treasuries. In fact, it also concerns the very infrastructure through which global payments flow. SWIFT, the international interbank messaging system that connects over 11,500 institutions in more than 200 countries, is no longer the only channel in the global financial system. China has developed CIPS, an alternative payment system for yuan transactions, which updated its operating rules in February 2026 with the aim of becoming a multi-currency platform. So, it is no longer a circuit dedicated solely to the renminbi. Of course, Russia has its own parallel system, known as SPFS. These alternative systems are playing an increasingly crucial role. For example, in March-April 2026, some ships paid in renminbi via CIPS to obtain the right to transit the Strait of Hormuz, the compulsory passage between the Persian Gulf and the Arabian Sea through which about one-fifth of the world’s oil passes.

In this context, it is interesting to note the behaviour of the euro. During the major episodes of tension in 2025 - such as the announcements regarding US tariffs and the outbreak of war in the Middle East - the European currency acted as a safe-haven asset: investors turned to it in times of instability. This situation is not taken for granted. As Christine Lagarde points out in the report’s preface, the problem is that this opportunity is due to external reasons, if you will, not because of any merits earned. To turn this moment into a structural advantege, we would need deeper European capital markets, a common safe-haven asset (i.e., a debt security issued at the European level that can compete with US Treasuries in terms of reliability and liquidity), and the completion of the Capital Markets Union - the well-known European project that has remained unfinished.

This is precisely the paradox of the ECB’s 2026 report. The euro is gaining ground, but not by choice. The supporting system is fragmenting, and the fragmentation is also what creates space for the European currency. The question we can ask is: Will Europe be able to turn this situation into a strategy before the opportunity ends definitively?

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