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ECB’s Lagarde: We’ll See Whether Dollar’s Attractiveness Erodes Further

19 October 2025

ECB’s Lagarde: We’ll See Whether Dollar’s Attractiveness Erodes Further
Christine Lagarde, president of the European Central Bank, at the ECB Governing Council press conference on December 12, 2024. Photo by Angela Morant/ECB under CC BY-NC-ND 2.0.

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Sunday noted the loss of attractiveness of the US dollar.

In remarks on US television channel CBS' news program Face the Nation, Lagarde said, “I see signs that the attraction of the dollar is slightly eroded and future will tell whether there is more erosion of that.”

“But when you look at the rise of cryptos, number one, when you look at the price of gold,” she continued. “Gold is typically, in any situation, the ultimate destination for safe haven. Price of gold has increased by more than 50% since the beginning of the year.”

“That's a clear sign that the trust in the reserve currency that the dollar has been, is and will continue to be, is eroding a bit,” she said. “In addition to that, we've seen capital flows outside of the U.S. towards other destinations, including Europe.”

Trust in a currency depended on “geopolitical credibility” along with “the rule of law and strong institutions” and sufficient military strength, she said.

“I think on at least one and possibly two accounts, the U.S. is still in a very dominant position, but it needs to be very careful because those positions erode over the course of time,” she said, citing the experience of the British pound.

However, this is a trend that “happens gently, gently, you don't notice it and then it happens suddenly,” she said. “And we are seeing intriguing signs of it, which is why I think that having a strong institution with the Fed, for instance, is important.”

A “credible environment within which to trade is important,” she said. “So volatility, uncertainty, to the extent it is fueled by the administration, is not helpful to the dollar.”

The question was when corporates would stop accepting the pressure on their margins resulting from tariffs, she said. “And when they don't, because it's becoming too tight, then it will be on the consumer,” she said. “So it's a question of time.”