The international role of the euro

The international role of the euro remained broadly stable in 2024. The share of the euro across various indicators of international currency use has been largely unchanged, at around 19%, since Russia’s invasion of Ukraine. The euro continued to hold its position as the second most important currency globally.

This stability was noteworthy in a year that saw the ECB begin lowering policy rates, following further declines in inflation and continuing geopolitical tensions. The accumulation of gold by central banks continued at a record pace and some countries have been actively exploring alternatives to traditional cross-border payment systems. There is evidence of a link between shifts in invoicing currency patterns in global trade and geopolitical alignments, particularly since the invasion of Ukraine. New challenges to the euro’s international role have also emerged, including initiatives promoting the global use of cryptocurrencies.

At the time of writing, further shifts may be underway in the landscape of international currencies. The tariffs imposed by the US Administration have led to highly unusual cross-asset correlations. This could strengthen the global role of the euro and underscores the importance for European policymakers of creating the necessary conditions for this to occur. The number one priority must be advancing the savings and investment union to fully leverage European financial markets. Eliminating barriers within the EU is essential to enhancing the depth and liquidity of euro funding markets, which is a precondition for a wider use of the euro. The planned issuance of bonds at the EU level – as Europe takes charge of its own defence – could make an important contribution to achieving these objectives.

The ECB will play its role. In a more volatile geopolitical environment, accelerating progress on a digital euro is crucial for bolstering European sovereignty. Improving cross-border payment systems between the euro and other currencies will also increase resilience. And offering solutions for settling wholesale financial transactions recorded on distributed ledger technology platforms in central bank money will increase the efficiency of European financial markets and the global appeal of the euro. In addition, our euro liquidity lines to non-euro area central banks, which signal the ECB’s willingness to provide a backstop in stressed market conditions, foster the use of the euro in global financial and commercial transactions.

Finally, the global appeal of the euro is underpinned by sound policies in the euro area and strong, rules-based institutions. Upholding the rule of law remains essential for maintaining, and potentially increasing, global trust in the euro.

The ECB will continue to monitor developments and publish information on the international role of the euro on a regular basis.

Christine Lagarde
President

This 24th annual review of the international role of the euro presents an overview of developments in the use of the euro by non-euro area residents in 2024. This was a year that saw continuing geopolitical tensions, decreases in policy interest rates and further declines in inflation in the major advanced economies.

On balance, the international role of the euro remained broadly stable in 2024. A composite index of the international role of the euro – computed as a simple arithmetic average of the share of the euro across a broad range of indicators – remained broadly stable at both constant and current exchange rates, standing at around 19% (Chart 1). The euro also remained firmly established as the second most important currency in the international monetary system (Chart 2).

Accordingly, the share of the euro in global official holdings of foreign exchange reserves remained stable, at 20%, broadly unchanged since the start of Russia’s full-scale invasion of Ukraine. Special feature A shows that holdings of euro area government debt securities by official foreign investors have remained generally resilient since Russia’s invasion, reaching almost €1 trillion (or more than one-third of foreign holdings of euro area government debt securities) at the end of 2024. The decline in holdings by countries not geopolitically aligned with the West – around 5% compared with pre-invasion levels – has so far been contained, highlighting the importance of upholding the rule of law. Meanwhile, the share of the US dollar in global official holdings of foreign exchange reserves declined by 2.0 percentage points at constant exchange rates, to 57.8% (Section 1.1). The share of the renminbi stood at 2.2%, 0.4 percentage points below its 2022 peak. Surveys of official managers point to China’s deteriorating economic outlook as one factor that has weighed on the renminbi’s appeal as a reserve currency. Diversification into non-traditional reserve currencies such as the Australian dollar and the Canadian dollar continued, with their combined share rising to 9.6% – an increase of 2.4 percentage points compared with the levels seen before Russia’s invasion.

Issuance of international loans and bonds denominated in euro was particularly dynamic in 2024, increasing by over 40% to nearly USD 900 billion. This was its highest level since the global financial crisis of 2007-09 (Section 1.2). Bonds made up two-thirds of this issuance, with US firms alone issuing nearly USD 95 billion in bonds, commonly referred to as “Reverse Yankees”, compared with about USD 60 billion in 2023. Box 2 shows that the primary driver of the increased issuance of these bonds was the shift in expectations for policy rates on both sides of the Atlantic. By contrast, relative credit spreads and deviations from covered interest parity played a more limited role.

Other indicators of the international role of the euro remained broadly stable or point to some increases in the position of the euro during the review period (Chart 3 and Table 1). These indicators include global foreign exchange settlements (broadly stable), the outstanding stock of international debt securities (+0.3 percentage points), the outstanding stock of international deposits (+1.1 percentage points) and the outstanding stock of international loans (+2.2 percentage points). An IMF-ECB staff survey of more than 100 countries presented in Special feature B indicates that the share of the euro as a currency of invoicing for global goods exports has remained close to pre-pandemic levels, at more than 40%.

Although current data indicate no significant changes in the international use of the euro, it is important to remain vigilant. For instance, geopolitical concerns remained high for reserve managers and continued to weigh on their investment decisions. Surveys suggest that 80% of official reserve managers continued to consider geopolitics as a major factor affecting their portfolios for the next five to ten years (Section 1.1).

Box 1 shows that central banks continued to accumulate gold at a record pace. Central banks purchased more than 1,000 tonnes of gold in 2024, which is double the average annual amount seen in the previous decade. Global holdings of gold by central banks now stand at 36,000 tonnes, close to the all-time high of 38,000 tonnes reached in 1965 during the Bretton Woods era. With the price of gold reaching new highs, the share of gold in global foreign reserves at market prices, at 20%, surpassed the share of the euro (16%). Survey data suggest that two-thirds of central banks invested in gold for purposes of diversification, while two-fifths did so as protection against geopolitical risk.

Moreover, some countries further explored alternatives to traditional cross-border payment systems (Section 1.3). At the summit of BRICS+ nations, held by Russia in Kazan in October 2024, the leaders of Brazil, Russia, India, China, South Africa and other nations welcomed the increased use of local currencies in global financial transactions and discussed establishing a new cross-border settlement and depository infrastructure: BRICS Clear. In March 2025 Hong Kong announced plans to develop an Asian international settlement house with a view to reducing dependence on traditional financial infrastructure and boosting the global use of the renminbi. In addition, the Chinese Cross-Border Interbank Payment System (CIPS) continued to grow rapidly in 2024, with the value of transactions increasing by 22% to around USD 6 trillion in the fourth quarter of the year. Box 3 finds that geopolitical factors have a significantly greater impact on the likelihood of interlinking fast payment systems between two countries than economic factors such as bilateral trade and geographic distance.

Special feature B similarly provides some evidence of a relationship between shifts in invoicing currency patterns and geopolitical alignment, especially since Russia's full-scale invasion of Ukraine. The evidence is most marked in certain countries that have distanced themselves geopolitically from the West, such as Russia, Belarus, Kyrgyzstan and Uzbekistan, where the share of exports invoiced in US dollars and euro was between 10 and 50 percentage points lower in 2023 than over the period 2015-19.

New challenges for the international role of the euro have emerged more recently. The new US Administration has recently taken initiatives to support the global use of cryptocurrencies. These initiatives include the creation of a “strategic bitcoin reserve”, using USD 17 billion in bitcoin seized by the US Treasury in forfeiture proceedings, while other crypto-assets owned by the US government would be pooled to make a “digital assets stockpile”. In addition, some initiatives aim to boost innovation and facilitate the issuance and use of US dollar-based stablecoins, which accounted for around 99% of the capitalisation of the stablecoin market of approximately USD 190 billion at the end of 2024. These developments may have implications for capital flows if they lead to shifts in demand for international reserve assets, and for global financial stability more broadly. US dollar-based stablecoin issuers already hold nearly USD 150 billion in US government debt securities, which is comparable with the holdings of residents in countries such as Saudi Arabia, Korea, Mexico and Germany.

At the time of writing, further shifts may be underway in the landscape of international currencies. The tariffs imposed by the US Administration have led to highly unusual cross-asset correlations. This could strengthen the global role of the euro and underscores the importance for European policymakers of creating the necessary conditions for this to occur. The number one priority must be advancing the savings and investment union to fully leverage European financial markets. Eliminating barriers within the EU is essential to enhancing the depth and liquidity of euro funding markets, which is a precondition for the wider use of the euro. The planned issuance of bonds at the EU level – as Europe takes charge of its own defence – could make an important contribution to achieving these objectives.

The ECB will play its role. In a more volatile geopolitical environment, accelerating progress on a digital euro is crucial for bolstering European sovereignty. Improving cross-border payment systems between the euro and other currencies will also increase resilience. And offering solutions for settling wholesale financial transactions recorded on distributed ledger technology platforms in central bank money will increase the efficiency of European financial markets and the global appeal of the euro. In addition, our euro liquidity lines to non-euro area central banks, which signal the ECB’s willingness to provide a backstop in stressed market conditions, foster the use of the euro in global financial and commercial transactions.

Finally, the global appeal of the euro is underpinned by sound policies in the euro area and strong, rules-based institutions. Upholding the rule of law remains essential for maintaining, and potentially increasing, global trust in the euro.

1.1 Use of the euro as an international reserve currency

In 2024 the share of the euro in global official foreign exchange reserves remained broadly stable at constant exchange rates, hovering at around 20% (Chart 4, panel a). Conversely, the share of the US dollar declined by 2.0 percentage points at constant exchange rates, to 57.8%.^[1] These developments align with long-term trends that started in the last decade, when the share of the euro was broadly stable, while the share of the US dollar, net of exchange rate valuation effects, declined by 11 percentage points.

By the end of 2024 the share of currencies other than the US dollar and the euro had risen to 22.4%, driven by strong gains in non-traditional reserve currencies (Chart 4, panel b). This group, which includes the Canadian dollar and the Australian dollar, among others, saw its combined share grow by 1.1 percentage points in 2024, to 9.6%. The share of non-traditional reserve currencies started to increase noticeably at the time of the outbreak of the COVID-19 pandemic in 2020 and has continued to rise ever since, underscoring the appeal of these currencies for reserve managers seeking diversification opportunities. The strong economic fundamentals of the countries issuing non-traditional reserve currencies further enhance their attractiveness. For instance, their sovereigns accounted for almost 60% of the global supply of AAA-rated government bonds in 2024.^[2]

Developments in other reserve currencies were mixed. The share of the Japanese yen continued to increase in 2024 as domestic government bond yields moved into positive territory. By contrast, the share of the pound sterling remained stable, while that of the Chinese renminbi continued to decline. The share of the renminbi has decreased from its peak of 2.6% in 2022. A survey of official reserve managers indicates that transparency issues, geopolitical concerns and a deteriorating economic outlook have weighed on the role of the renminbi as an international store of value.^[3]

After accounting for valuation effects, euro-denominated reserve holdings increased in 2024. While yields on the highest-rated euro area government bonds with a medium-term maturity remained lower than yields on government bonds in other reserve currencies, they were higher than in the past decade (Chart 5, panel a). A survey conducted among official reserve managers showed interest in increasing their exposures to the euro, with some respondents citing higher interest rates as a positive factor.^[4] Reflecting this, estimates of net purchases of euro assets turned positive. Reserve managers were net buyers of such assets, contributing a positive 0.9 percentage points to the overall change. However, the overall change was close to zero, owing to an offsetting exchange rate effect (see the green and yellow bars in Chart 5, panel b). Similarly, official reserve managers were net purchasers of assets denominated in Japanese yen and Canadian dollars, but net sellers of assets denominated in US dollars and, to a much lesser extent, Chinese renminbi.

In 2024 geopolitical concerns remained high for reserve managers and continued to weigh on their investment decisions. Surveys suggest that central banks continued to point to geopolitics as a key factor influencing their medium-term investment decisions (Chart 6, panel a). By contrast, at the time the surveys were conducted, these concerns were less palpable in the short term. For instance, in mid-2024, nearly 90% of the central banks surveyed replied that sanctions had not impacted their reserve management decisions (Chart 6, panel b). Special feature A shows that holdings of official foreign investors of euro area government debt have remained generally resilient since Russia’s invasion of Ukraine. The decline in holdings of countries not geopolitically aligned with the West have been limited to 5% of pre-invasion levels, highlighting the importance of upholding the rule of law.

The share of gold in total official foreign reserves – comprising foreign exchange and gold holdings – increased to 20% at the end of 2024, surpassing that of euro, on the back of historically high gold prices and purchases (Chart 7). Central banks increased their stock by more than 1,000 tonnes of gold in 2024 – double the level seen in the previous decade – while the price of gold surged by about 30% in nominal terms. At market valuations, the share of gold in total foreign reserve holdings (20%) surpassed the share of the euro (16%). Surveys suggest that hedging motivated by economic and geopolitical factors played a role in these historically large purchases of gold, notably in emerging and developing economies.^[5] Box 1 shows that countries that are geopolitically distant from the West have been active diversifiers into gold. Central banks worldwide now hold almost as much gold as they did in 1965 during the Bretton Woods era.^[6]

1.2 Use of the euro in international finance

The use of the euro as a currency of issuance for foreign currency-denominated debt grew noticeably in 2024. In particular, the share of the euro in foreign currency-denominated debt (bonds and loans) financing grew by more than 3 percentage points, to around 25% (Chart 3). This growth occurred on the back of a slight decline in the share of the US dollar, while the share of other currencies remained stable (Chart 8, panel a).

The increase in the share of the euro in foreign currency-denominated debt issued was driven by robust growth in both euro-denominated loans and bonds. Issuance of loans and bonds grew by more than 40% in 2024, reaching the highest combined level since the global financial crisis of 2007-09 (Chart 8, panel b). Bonds continued to account for the largest portion of this issuance, with a share of about two-thirds. Box 2 zooms in on euro-denominated “Reverse Yankee” bonds issued by US firms and shows that the recent increase in the issuance of such bonds has been driven to a large extent by a decrease in euro area risk-free rates, which lowered the total borrowing costs of issuing bonds in euro by non-euro area residents. Specifically, in 2024, the risk-free rate differential between the euro area and the United States (as measured by the difference in ten-year overnight index swap rates) declined by almost 60 basis points. In parallel, US investment-grade companies issued euro-denominated bonds worth USD 90 billion, compared with around USD 60 billion in 2023.

Most issuers of euro-denominated bonds and loans were based in advanced economies (Chart 9). Among the main jurisdictions, issuers based in the United Kingdom accounted for around 30% of both loan and bond issuance in euro in 2024. One-third of euro-denominated loans and 17% of euro-denominated bonds were issued in non-euro area EU countries. US firms accounted for almost one-fifth of bond issuance in euro but only a negligible share of loan issuance in euro. Differences in preferences for loans relative to bonds across jurisdictions might reflect structural factors, for instance, the fact that non-euro area EU firms have stronger trade, financial and institutional linkages with the euro area and its banking system as well as greater reliance on bank intermediation than US firms. Meanwhile, US firms tend to rely more heavily on market-based financing. Issuance by emerging market economies was limited, accounting for 5% and 15% of bonds and loans respectively. This stands in contrast to the international issuance of bonds in US dollars, where emerging market borrowers typically issue a considerably larger proportion of these instruments.

The sectoral breakdown of bond and loan issuers further highlights differences between bank and market-based financing (Chart 10). Financial services companies dominate international euro-denominated bond issuance, accounting for more than 60% of the total, likely owing to their extensive experience with regular capital market activities. By contrast, euro-denominated loan volumes are more tilted towards non-financial corporate entities, as these entities often rely on relationships with banks. Overall, the financial sector, the trade and transportation sectors and the construction and manufacturing sectors each account for approximately one-third of the loan volumes. Accordingly, the top three issuers of bonds in euro in 2024 – with deals in excess of €5 billion – were TD Bank Group and Morgan Stanley, a Canadian bank and a US bank, respectively, along with the Romanian government (Table 2). The two largest loans – with deals of around €8 billion and €15 billion respectively – were extended to DSV A/S and SwissCom AG, Danish and Swiss companies in the trade and transportation sectors (Table 3).

1.3 Use of the euro in international payments and trade

In 2024 the role of the euro in global payments remained stable. Euro payments settled through the T2 platform were comparable with those in previous years: the monthly value involving at least one non-euro area bank stood close to €12 trillion in 2024, accounting for about 43% of total payments on the platform (Chart 11).^[8] Cross-border euro payment messages processed via Swift – a global financial messaging network – hovered around 2023 levels. In March 2023 euro area banks adopted the ISO 20022 standard while migrating to the new consolidated T2-T2S Eurosystem platform. In that year, the share of cross-border payment messages in Swift denominated in euro declined from about 32% to around 13%. There are two main reasons for the decline. First, the launch by the Eurosystem in March 2023 of the new T2-T2S platform has increased the efficiency of liquidity management and payment practices, allowing participants to streamline their payment activities, thus reducing messaging volumes.^[9] Second, the new ISO 20022 standard has enabled Swift to single out cross-border payment instructions from other cross-border reporting messages exchanged between banks, with the latter no longer counted as cross-border payment messages. Under the old standard (MT 202), Swift cannot distinguish between the two types of messages and therefore considers both to be cross-border payment messages. Approximately 70% of Swift traffic, including traffic from the United States and the United Kingdom, still relies on the MT 202 standard. This results in larger volumes of cross-border payment messages exchanged by banks in these jurisdictions, which predominantly use the US dollar and pound sterling, compared with those exchanged by euro area banks, which account for the largest share of cross-border euro payments.

Geopolitical tensions could fragment the global cross-border payment landscape. Economic reasons such as cost reduction and trade expansion have traditionally been significant drivers for countries investing in new payment systems. However, strategic goals such as independence and geoeconomic influence are also relevant. Box 3 analyses the determinants of interconnecting fast payment systems across countries and provides empirical evidence that geopolitics is a crucial factor in establishing cross-border payment links. It shows that geopolitics has a stronger influence than trade relationships or technical standards on interlinking.^[10] If geopolitical tensions persist, the role of major payment infrastructures could be challenged, contributing to the fragmentation of the global payment landscape. One way to reduce these risks is to strengthen cross-border links and increase their appeal by reducing costs and settlement times. For instance, in October 2024 the Eurosystem decided to launch initiatives to help improve cross-border payments within the EU and beyond by implementing cross-currency settlement services in its TARGET Instant Payment Settlement (TIPS) service, exploring the benefits of linking TIPS with other fast payment systems. It is also considering whether to join Project Nexus, a multilateral platform project led by the Bank for International Settlements Innovation Hub.^[11]

In particular, correspondent banking, which has traditionally stood at the centre of the cross-border payment network, has retrenched in recent years. Correspondent banking relations are financial arrangements in which one bank (the correspondent) provides payment services on behalf of another bank from another country. In 2022 there were 90,000 active correspondents over 9,000 payment corridors, about 20-30% fewer than a decade earlier (Chart 12, panel a). Surveys suggest that 40% of banks terminated these relationships owing to revisions in their business strategies, while one-third cited a lack of profitability and one-fifth higher compliance and reputational risks.^[12] In reflection of this, correspondent banking started to retrench after financial sanctions were imposed on Russia in 2014 and one major bank was fined for facilitating transactions with Iran, Cuba and Sudan.^[13] The retrenchment accelerated after other packages of sanctions were imposed on Russia from 2022 onwards. All regions were affected, with Central and South America experiencing the steepest decline (nearly 50%), followed by Asia, Europe and Oceania (between 30% and 40%), while the impact in North America was less (around 20%). These developments have left many countries and corridors under-served.

Moreover, some countries have continued to explore alternatives to traditional cross-border payment systems. An index tracking mentions of initiatives on cross-border payments in communiqués of G7 and BRICS leaders since 2008 shows that mentions by BRICS leaders picked up noticeably in the wake of Russia’s full-scale invasion of Ukraine (Chart 12, panel b). In particular, at the summit attended by BRICS+ nations held by Russia in Kazan in October 2024, the leaders of Brazil, Russia, India, China, South Africa and other nations welcomed an increased use of local currencies in global financial transactions and discussed establishing a new cross-border settlement and depository infrastructure, BRICS Clear (Table 4). In March 2025 Hong Kong announced plans to develop an Asian international settlement house aimed at reducing dependence on traditional financial infrastructure and boosting the global use of the renminbi. News reports suggested that crypto-assets were being increasingly used to settle a portion of oil exports by Russia and smooth the conversion of Chinese renminbi and Indian rupees into roubles.

In parallel, the role of the Chinese renminbi in international trade continued to increase in the review period. The share of the renminbi in the settlement of China's external trade increased to 38% for goods and 47% for services in 2024, up from 26% and 31% respectively in 2023 (Chart 13, panel a). In particular, this increase reflected a higher use of the renminbi for settling Russia’s trade with China, which has expanded rapidly since sanctions were imposed after the full-scale invasion of Ukraine (Chart 13, panel b). Use of the renminbi in trade finance has become similarly more prominent, accounting for 6% of global Swift trade finance messages in 2024, on a par with the euro. The US dollar continued to dominate this market segment, with more than 80% of total messages (Chart 14, panel a).

These developments reflect the efforts made by China to promote the international use of its currency in global payments. The most prominent initiative remains the Chinese CIPS, a cross-border payment and messaging system with the renminbi as a settlement currency, which has grown rapidly since it was created in 2018.^[14] The system now connects banks across 200 countries and cleared approximately two million transactions with a total value of about USD 6 trillion in the fourth quarter of 2024 (Chart 14, panel b). Turnover remains an order of magnitude smaller than the almost 45 million transactions processed daily by Swift. Moreover, CIPS continues to rely on Swift messaging to process cross-border transactions and more than 90% of direct participants are located in either China and Hong Kong or are foreign branches of Chinese banks.^[15]

Meanwhile, crypto-assets and stablecoins are making strides in cross-border payments. Recently, the new US Administration has taken initiatives to enhance the use of crypto-assets and dollar-pegged stablecoins. This includes the creation of a “strategic bitcoin reserve” using USD 17 billion worth of bitcoin seized by the US Treasury in forfeiture proceedings, while other crypto-assets owned by the US government would be pooled to make a “digital assets stockpile”. In addition, some initiatives aim to encourage innovation and facilitate the issuance and use of dollar-based stablecoins. The capitalisation of the stablecoin market reached about USD 190 billion at the end of 2024, roughly 7% of the capitalisation of the entire crypto-assets market. Almost all (99%) of stablecoins are pegged to the US dollar (Chart 15, panel a). The primary advantage of using stablecoins for cross-border payments is the elimination of intermediaries and middlemen. Moreover, they offer pseudo-anonymity, faster payment processing and the ability to operate 24/7/365. This can make stablecoins particularly attractive in countries with unstable and volatile domestic currencies, where a significant portion of the population is unbanked or subject to high remittance fees.

A greater use of US dollar-pegged stablecoins could boost demand for US Treasuries from stablecoin issuers, thus contributing to lowering US interest rates and strengthening the US dollar. Demand for dollar-pegged stablecoins is global but is particularly strong in Asia (Chart 15, panel b). Going forward, dollar-pegged stablecoins could further attract international depositors seeking to access US safe assets, in particular from jurisdictions with weak banking systems or high inflation, strengthening the role of the US dollar in global finance. The largest dollar-pegged stablecoins hold US dollar assets to back their liabilities. For instance, holdings of US Treasuries by Tether – the world’s largest stablecoin – are around USD 100 billion. Dollar-based stablecoin issuers combined hold nearly USD 150 billion in US government debt securities, which is comparable with the holdings of residents in countries such as Saudi Arabia, Korea, Mexico and Germany (Chart 16, panel a). Stablecoin issuers typically invest in short-term paper for reasons of liquidity. As the market for short-term US debt amounts to about USD 6 trillion, stablecoins issuers already account for almost 3% of this market segment.^[16]

A more widespread adoption of US dollar-pegged stablecoins could also raise several challenges. First, households and businesses could substitute deposits for stablecoins, in turn leading to higher volatility in deposit supply and higher funding costs for banks, thus adversely impacting the cost and availability of credit. Second, stablecoins may fail to guarantee convertibility at par value at all times, making them susceptible to runs and potentially destabilising to the system they are meant to improve.^[17] Third, the widespread adoption of stablecoins could increase currency substitution risks, leading to “digital dollarisation” in countries with weak fundamentals.^[18] This could impair the effectiveness of domestic monetary policy and amplify capital outflows in response to adverse shocks, hence raising risks to financial stability.^[19] These developments could have a destabilising effect on emerging markets and less developed economies, particularly small economies that are integrated into global value chains. Fourth, stablecoins often incur higher transaction fees compared with centralised payment networks.^[20] In 2024 transaction fees on Ethereum, one of the two largest Tether ledgers, exceeded the transacted value in 6% of all transactions and 18% of retail transactions (Chart 16, panel b). Nearly 70% of retail transaction costs exceeded 3%, far above the average cross-border transaction costs in 2024.^[21] Finally, stablecoins tend to react to global risk shocks in a similar manner to speculative assets, perhaps reflecting the fact that they are often used as vehicles for transactions in more speculative crypto-assets.^[22] For all these reasons, stablecoins should be properly regulated in line with the agreed Financial Stability Board principles,^[23] as achieved in Europe, for example, through the Regulation on markets in crypto-assets.^[24]

Against this background, accelerating progress on a digital euro is key, as emphasised by European leaders at the March 2025 Euro Summit.^[25] It would support a competitive and resilient European payment system, thereby contributing to Europe’s economic security and strengthening the international role of the euro. Moreover, the ECB’s initiatives to offer solutions for settling wholesale financial transactions recorded on distributed ledger technology platforms in central bank money^[26] and to improve cross-border payments by interlinking fast payment systems^[27] will support the efficiency of European financial markets and the global appeal of the euro.

A Geopolitics and foreign holdings of euro area government debt

By Roland Beck, Vlad Burian, Georgios Georgiadis and Peter McQuade

This special feature uses granular data from the ECB’s Securities Holdings Statistics (SHS) to investigate whether foreign holdings of euro area securities react to geopolitics. Where similar information is available from the US Treasury, a comparison is made with respect to foreign holdings of US Treasury securities. The analysis reveals several key insights. First, foreign investors hold almost a quarter of both euro area and US government debt. While these total foreign holdings are concentrated in countries geopolitically aligned with the West, foreign official sector holdings of euro area government debt are mainly held by non-aligned countries. Second, official foreign investors’ holdings of euro area government debt have remained generally resilient since Russia’s invasion of Ukraine. The decline in holdings of countries (excluding Russia) that are not geopolitically aligned with the West, which have dropped by 5% relative to pre-invasion levels, has so far been contained, highlighting the importance of upholding the rule of law. Econometric estimates suggest that geopolitical non-alignment explains at least part of this decline. These patterns still hold, even after correcting for geographic biases in international financial statistics to the extent possible. As the decline is small, the impact on euro area bond yields has been very limited thus far.

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B Global trade invoicing patterns: new insights and the influence of geopolitics

By Anja Brüggen, Georgios Georgiadis and Arnaud Mehl

This special feature uses new data collected by ECB and IMF staff from over 120 countries to examine trends in global trade invoicing currency patterns up to 2023. The analysis reveals several key insights: the US dollar and the euro remain the most prominent primary invoicing currencies, together accounting for over 80% of global trade invoicing. While the US dollar serves as a global vehicle currency, the euro's role as a vehicle currency is particularly significant in Europe and parts of Africa. Despite some growth, the renminbi's share in global trade invoicing remains very low, at less than 2%, although it is increasing in the Asia-Pacific region and in some parts of Europe. Finally, this special feature presents some evidence of a relationship between shifts in invoicing currency patterns and geopolitical alignment, especially since Russia's full-scale invasion of Ukraine. This evidence is most marked for certain countries which have distanced themselves geopolitically from the West, such as Russia, Belarus, Kyrgyzstan and Uzbekistan, where the share of exports invoiced in the US dollars and euro was 10-50 percentage points lower in 2023 than in 2015-19.

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