Rabat – European Central Bank President Christine Lagarde warned on Monday that the global economic system, which has long relied on American leadership and the US dollar, is starting to break apart.
She said this shift could bring risks for Europe, but also new opportunities for the euro, pushing for the latter to become the world’s main currency.
Speaking at the Hertie School in Berlin, Lagarde said, “The global economy thrived on a foundation of openness and multilateralism underpinned by US leadership.”
She explained that the US dollar has been the main global currency for decades, as it helped trade and finance grow around the world. Europe, she added, benefited greatly from this system.
However, Lagarde believes this order is now “fracturing.” She pointed to growing tensions in global trade, especially actions by US President Donald Trump, who has threatened heavy tariffs on several countries, including the European Union.
“Multilateral cooperation is being replaced by zero-sum thinking and bilateral power plays. “Openness is giving way to protectionism,” she said.
Lagarde warned that if this trend continues, it could hurt the global economy and affect Europe’s own growth. “Any change in the international order that leads to lower world trade or fragmentation into economic blocs will be detrimental to our economy,” she said.
Still, she noted that the weakening role of the US dollar could open the door for the euro to become a stronger global currency. A stronger euro, she said, would help EU countries by lowering borrowing costs, reducing the impact of currency swings, and giving Europe more control over its economic future.
But this won’t happen automatically. “This is not a privilege that will simply be given to us. We have to earn it,” Lagarde said. She said that the EU must stay committed to open trade, strengthen its economy, defend the rule of law, and invest in its own security.
Her comments come as tensions rise between the US and the EU. Last week, Trump expressed frustration with ongoing trade talks, saying the EU was “formed for the primary purpose of taking advantage of the United States on trade.”
He threatened to impose 50% tariffs on EU goods, a big jump from the current 10%. If enforced, these tariffs would affect many products and further strain relations with America’s largest trading partner.
