After years in the wilderness the euro is again on the offensive as policymakers seize a rare geopolitical opening. According to recent coverage, the dollar is down roughly 9% over the past year, and European leaders are using that momentum to nudge trade, reserves and finance toward the single currency.
This week the European Central Bank formalised a big step: it will widen its Eurep repo facility so nearly all foreign central banks can borrow euros against high‑quality collateral, and individual lines will let central banks draw up to €50 billion each, with the revamped terms operational from July. Reuters lays out the details on access rules and caps in its report on the ECB expansion. That change aims to reduce the frictions and tail‑risk of holding euro assets during market stress, effectively creating a standing lender‑of‑last‑resort for non‑euro central banks.
Policy makers and markets now face a clear tradeoff. Bloomberg reports finance ministers and the EU’s core governments are readying deeper capital‑markets integration and even joint issuance to boost foreign demand for euro assets, while worrying that any sustained shift in global reserve patterns could lift the euro and hurt exporters, as outlined in coverage of the finance chiefs. Expect a staged, political push next month around an EU6 meeting, more technical work on market plumbing, and likely a push for pooled debt or liquidity backstops. Markets will test the story: a firmer euro would ease dependence on dollar funding but squeeze margins for euro‑area exporters.
Position for a gradual campaign, not an overnight currency regime shift; monitor official take‑up of the Eurep lines, announcements on joint issuance, and FX flows into euro assets as the next evidence of traction.
