The international role of the euro: down but not out

Speech by Mr Claudio Borio, Head of the Monetary and Economic Department of the BIS, at the public hearing before the European Economic and Social Committee on "Strengthening the international role of the euro: European and international perspectives", Brussels, 4 April 2019.

Abstract

The euro has suffered numerous setbacks as an international currency. But its heft has increased in three significant and yet underappreciated respects. In the bond market, estimates of transatlantic spillovers suggest that their strength from the euro area to the United States has been intensifying and is now practically on a par with that of spillovers going in the opposite direction. In currency markets, the euro now plays an important role as an anchor for other currencies, including China's renminbi. And in commodity markets, although commodities are mainly priced in dollars, the producer countries' currencies have tended to move with the euro against the dollar, so that commodity prices, notably that of oil, are paradoxically less volatile in euros than in dollars - the exchange rate has acted as a shock absorber. Regardless of its impact on pricing, denominating commodities in euros would have significant implications in other dimensions.