© Reuters. New 100 and 200 euro banknotes are on display in Vienna, Austria, on September 17, 2018. REUTERS / Heinz-Peter Bader
FRANKFURT (Reuters) – The euro retained its position as the world’s second most used currency for trade, finance and reserve-building last year, even as Russia reduced its reliance on it after being hit by sanctions, a European Central Bank report showed on Wednesday. .
The dominance of the US dollar and the euro – which comes second – as global currencies are called into question by the rise of China, the deterioration of relations between Russia and the West, and talk of greater financial independence in emerging countries. From India to Brazil.
But the European Central Bank’s annual report on the international role of the single currency highlighted its resilience, though the central bank warned that this could change quickly.
The report stated that the euro kept or even increased its share of global foreign exchange reserves (20.5%), international debts (22%) and loans (27.6%), as well as the volume of foreign exchange trading last year.
Its share of global payments via SWIFT fell from around 40% to 30%, but that was largely in favor of the dollar, with only marginal gains in altcoins such as the Chinese renminbi.
Russia reduced its use of the euro as a billing currency — from 35% to 13% — and switched to the ruble and renminbi after the European Union and other Western powers sanctioned it for its February 2022 invasion of Ukraine.
But the use of the ruble on the Swift system collapsed after Russian banks disconnected from that network, the largest in the world. The report did not provide data on alternative messaging systems such as those of Russia and China.
The ECB report said that the currency used internationally can be quickly exchanged for another when trade flows change.
He cited evidence from Europe itself, where the euro has replaced the dollar as the billing currency in the eurozone’s neighbors since its launch in 1999. The euro is now shared by 20 countries.
“The international currency situation should not be taken for granted,” European Central Bank President Christine Lagarde said in a statement accompanying the report.
Board member Fabio Panetta added that “further European economic and financial integration”, such as a full capital markets union, would be “pivotal in increasing the flexibility of the euro’s international role in a potentially more divided global economy”.
The report also showed that London remained the main venue for euro forex trading and that Britain’s importance to international euro financial activities had not changed substantially since Brexit.