ECB President Christine Lagarde believes that the dollar and euro will not lose their dominant position among international currencies for the time being. The dollar is clearly more dominant than the euro, Lagarde said today at an event in New York.
So far, the data have not shown any significant changes. “But they suggest that the status as an international currency should no longer be taken for granted.” Attention must also be paid to the currency in which trade transactions are organized. This applies in particular to oil.
Some countries rely on alternatives
Some countries intend to increase their use of alternatives to traditional currencies in international trade, such as the Chinese renminbi or the Indian rupee, Lagarde said. There is also an increasing accumulation of gold as an alternative reserve, possibly driven by countries that are geopolitically more closely linked to Russia or China, the speech said.
In this context, Lagarde also referred to attempts to create alternatives to the global bank communication system SWIFT. “Since 2014, Russia has created such a system for domestic and cross-border use.” Around 50 banks in a dozen countries used it last year. “And since 2015, China has set up its own system to process payments in renminbi.”
Refusal to revise inflation target
She rejected considerations that the ECB could revise its inflation target of two percent before it had reached it. At the moment there is absolutely no reason to change this medium-term 2% target, she said. “Once we get there, once we’re safe to stay there, we can talk about it,” she said. Most recently, inflation in the euro area was 6.9 percent – which is far from this target.
