By David Barwick – BUDAPEST (Econostream) – European Central Bank Governing Council member Martin Kocher on Monday said the euro’s international attractiveness had recently increased, citing international debt issuance and foreign demand for Eurozone assets.

In a keynote speech at the Lámfalussy Lectures Conference, Kocher, who heads the Austrian National Bank, said the euro could serve as a stabilizing force in a more volatile global order and that Europe should be more confident about what it could achieve through common institutions.

“The attractiveness of the euro has further increased recently, as evidenced by international debt issuance and foreign investor demand for euro area assets,” he said.

The euro had become the world’s second-most important international currency since its launch 25 years ago, Kocher said.

About one-fifth of global foreign exchange reserves were held in euros, compared with slightly less than 60% in US dollars, he said.

While the dollar remained the leading global currency for trade invoicing, around two-thirds of trade within the European Union was invoiced in euros, Kocher said.

“This shows that people have a lot of trust in the euro, both abroad and at home,” he said.

The ECB’s independence was an important source of that trust, Kocher said.

In most Central, Eastern and Southeastern European EU countries outside the Eurozone, people generally had more confidence in the euro than in their national currencies, he said.

In Hungary, less than 40% of respondents in the Austrian National Bank’s late-2025 Euro Survey expected the forint to be stable over the following five years, while more than 70% expected the euro to be stable, Kocher said.

Kocher said Europe should consider whether the euro could eventually take on a stronger international role as confidence in the US dollar’s dominance became less assured.

Recent US fiscal policy and debt-ceiling disputes raised questions about the long-term sustainability of US government debt, he said.

“For the euro, we have an important mechanism in place to ensure this sustainability: the Stability and Growth Pact,” Kocher said.

But Europe still lacked something central to a stronger international role for its currency, he said.

“But although Europe has established rules for long-term fiscal sustainability, it does not provide a common safe asset,” he said.

Kocher also pointed to concern that the US was using the dollar’s international role to pursue geopolitical objectives.

Financial sanctions were legitimate when used to punish violations of the international rules-based order, he said.

“This becomes problematic if such sanctions are imposed to support purely national interests rather than punishing violations of the international rules-based order,” he said.

Europe might also need to think about the euro’s role if the US became less willing to act as an insurer for the rest of the world during crises, Kocher said.

“We might have to start thinking what role the euro could play in such a situation and whether we would be willing to accept such a role,” he said.

Within Europe, the euro had lowered transaction costs, reduced foreign-exchange risk and improved cross-border price comparability, Kocher said.

Eurozone membership also gave countries access to a larger financial market, the European Stability Mechanism, ECB liquidity and the banking union, he said.

For countries in Central, Eastern and Southeastern Europe, adopting the euro could also import monetary policy credibility and help anchor inflation expectations, Kocher said.

Membership would give countries greater influence over common policymaking, he said.

Turning to Hungary, Kocher said euro adoption would reduce transaction costs because the euro was the main invoicing currency for the country’s external trade.

It would also reduce foreign-exchange risk for companies, he said.

While foreign-currency lending to households had been almost entirely eliminated in Hungary in 2015, foreign-exchange loans still mattered for firms, Kocher said.

Much of that corporate foreign-currency debt was probably denominated in euros and would become local-currency debt if Hungary joined the Eurozone, he said.

Kocher said the potential costs of euro adoption also had to be taken seriously, including the loss of national monetary autonomy and the possibility of uneven monetary policy transmission.

However, monetary autonomy for EU members outside the Eurozone could be more limited than it appeared, he said.

“Trade-offs are the very bread and butter of monetary policymaking,” Kocher said.

Even a fully homogeneous currency area would still face the short-term trade-off between inflation and unemployment, he said.

Kocher said fears that euro adoption could create additional inflation were often overstated.

“According to available estimates from recent euro introductions in Central, Eastern and Southeastern Europe, these fears are usually exaggerated,” he said.

Euro adoption had appeared to cause only small and temporary additional inflation increases, he said.

Kocher said non-euro EU members had to decide for themselves whether to join the currency union.

“I am of course not in the position to make any recommendations today,” he said.

Hungary would be welcome in the euro family once it fulfilled the convergence criteria and made a deliberate decision to join, Kocher said.

“Europe can and must provide a global pillar of stability based on its sound, rules-based and stable institutions,” he said.

Europe could build on the euro, strengthen its international role and enlarge the currency area within the EU, thereby promoting prosperity in Europe and its neighborhood, Kocher said.