ECB’s Villeroy: Promoting Euro’s Global Role Does Not Mean Expecting Stronger Exchange Rate

2 October 2025

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Thursday warned that it would be “naïve” to think the euro could soon replace the US dollar, adding that strengthening the common currency's international role did not necessarily imply expecting a higher exchange rate.

In a speech at an ESM conference in Luxembourg, Villeroy, who heads the Banque de France, said: “We shall not be naïve in believing that the euro will replace the US dollar soon.”

“[P]romoting the international role of the euro does not mean expecting its exchange rate to rise,” he said.

The ECB had no target for the exchange rate but was monitoring closely the potential impact of a strong euro on inflation, he said.

He explained that the ECB’s previously neutral stance on the international role of the euro stemmed from concerns about losing control of monetary policy, which he said were “no longer valid.”

To reinforce the euro’s international standing, Villeroy urged deeper economic and financial integration within Europe. He called on the European Commission to set a clear timetable and a comprehensive package, highlighting the need for closer single market integration, stronger investment and savings, and greater support for innovation.

He warned that the rapid rise of stablecoins in the US posed a threat to Europe, as money risked becoming “privatized” and “de-Europeanized.”

“In this context, the creation of a wholesale central bank digital currency (CBDC), as well as a digital euro for retail, are both urgently needed, not only to strengthen our economic and financial sovereignty, but also to enhance the global standing of the euro,” he added.

Europe should promote greater use of the euro for invoicing, he said, noting that this could be particularly valuable in negotiations with trade partners harmed by recent US trade policies.

Villeroy pointed to the development of a safe asset market as a means of strengthening the euro’s international role, proposing the merger of existing supranational debt, the transformation of national sovereign debt into genuine European sovereign debt, and the issuance and rollover of new supranational debt.

Exchanging sovereign bonds for Eurobonds, he argued, would “help to create more European safe assets without adding to the EU’s fiscal burden: up to €6 trillion in supranational bonds in the euro area, together with the remaining AA-rated sovereign bonds.”