ECB's Nagel says stronger U.S. dollar is still needed

MADRID (Reuters) -European Central Bank policymaker Joachim Nagel on Wednesday underlined the role of the U.S. dollar as a reserve currency for the global system that was needed, though he also expected the euro to become stronger in that same role over the next few years.

"The dollar is very important for the world financial system, we still need a strong dollar," Nagel told an event in Madrid.

Some investors have reduced their exposure to the dollar in recent months, worried that trade tensions and erratic policy by the U.S. administration will ultimately erode the greenback's global reserve currency status.

But others argue that there is no alternative for now since the dollar market is far bigger than any other competitor, and the euro zone, the largest potential challenger, is simply too fragmented.

(Reporting by Jesús Aguado; Editing by David Latona)