Finance
Challenge to dollar supremacy a long way off, central bankers say
Published by Global Banking & Finance Review®
Posted on July 1, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 1, 2025
3 min readLast updated: January 23, 2026
Central bankers agree the dollar's dominance as a reserve currency remains unchallenged, with potential euro competition requiring significant reforms.
By Francesco Canepa and Balazs Koranyi
SINTRA, Portugal (Reuters) -There is no prospect of a major challenge to the dollar's status as the world's reserve currency of choice any time soon, central bankers gathered for an annual conference in the Portuguese resort of Sintra said on Tuesday.
U.S. President Donald Trump's unpredictable economic, trade and security policies have spurred questions over whether the U.S. currency, which accounts for 58% of the world's reserves, can remain at the centre of the global monetary system.
European Central Bank President Christine Lagarde, who has argued the euro could over time become an alternative to the dollar if Europe's currency zone enacted necessary reforms, said 2025 could in future be viewed as "pivotal" in this respect.
"(But) for a major change to occur it will take a lot of time and a lot of effort," she told a panel with her U.S., British, Japanese and Korean counterparts.
She noted that "investors are looking at options" in a climate characterised by uncertainty and unpredictability and that there was evidence that the euro was benefiting from that.
"It's not going to happen just like that overnight. It never did historically," she said. "But there is clearly something that has been broken. Whether it is fixable, or whether it is going to continue to be broken - I think the jury's out."
Bank of Japan Governor Kazuo Ueda also noted that any significant change would depend on structural reforms.
"It's to a certain extent up to what areas like Europe or China will do in terms of improving the efficiency or convenience of their currencies," he said, citing as an example the efforts at capital market integration in the euro zone.
Bank of England Governor Andrew Bailey said any change to the dollar's status was a long way off.
"I don't see ... a sort of a major shift at the moment," he said, arguing that any reserve currency had to offer a supply of safe assets into the market that can be used for purposes of collateral and security.
Bank of Korea Governor Rhee Chang-yong said the prospect of a long-term shift of the dollar sentiment was a subject of discussion for some even as they retained their dollar holdings.
"It looks like people are talking about it. But at this moment they keep the dollar share while increasing their hedging ratio," he told the panel.
Lagarde told a recent audience in Berlin that there was an opening for a "global euro moment", if it earned it.
She said Europe would need to build a deeper, more liquid capital market, bolster its legal foundations and underpin its commitment to open trade with security capabilities.
While the dollar's current share of international reserves is the lowest it has been in decades, its 58% tally is still well above the euro's 20% share.
(Writing by Mark John. Editing by Mark Potter)
Central bankers believe there is no immediate challenge to the dollar's status as the world's reserve currency, with significant changes being a long way off.
Christine Lagarde suggested that the euro could become an alternative to the dollar over time, but emphasized that necessary reforms in Europe are crucial for this to happen.
Bank of Japan Governor Kazuo Ueda indicated that any significant change would depend on structural reforms in regions like Europe and China to enhance the efficiency of their currencies.
Despite the dollar's share of international reserves being the lowest in decades, it still accounts for 58%, which is significantly higher than the euro's 20% share.
Bank of England Governor Andrew Bailey stated that any change to the dollar's status as a reserve currency is unlikely in the near future, as it must provide safe assets for collateral and market use.
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