ECB’s Lagarde: “Europe Cannot Remain a Passive Safe Haven”

7 October 2025

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Tuesday urged Europe to strengthen the international role of the euro, arguing that the bloc must move beyond being a “passive safe haven” and build the conditions for the single currency to become a true global force.

Speaking at a Business France event in Paris, Lagarde said the euro area’s openness left it vulnerable to global shocks and policy spillovers. “We cannot remain a passive safe haven, absorbing the shocks created elsewhere,” she said. “We need to be a currency that shapes its own destiny.”

Lagarde said Europe was “somewhere in between” a safe-haven and a fully international currency. While the euro benefits from deep foreign exchange markets and widespread use in trade invoicing, she said the region still lacks the financial depth to fully benefit from capital inflows, with shallow capital markets and large household deposits limiting productive investment.

To move forward, she called for completing the Single Market and capital markets union to remove internal barriers, improve financing for innovation and make Europe more attractive to investors.

“Unless we complete the Single Market and build a genuine savings and investments union, Europe will not be capable of either absorbing or channeling capital inflows efficiently,” she said.

Lagarde also called for policies to increase the use of the euro in global trade and finance, highlighting work on the digital euro, faster cross-border payment systems and euro liquidity lines as steps to make the currency more accessible and stable.

She said trust in European institutions and central bank independence were major assets, but warned that credibility depended on governments’ ability to act. “They must be capable of taking the decisions that deepen our Single Market, complete our capital markets and strengthen our geopolitical role,” she said.

Lagarde concluded that the euro should “continue to stand as a pillar of stability and strength for Europe, even in a more uncertain world.”