BERLIN: European Central Bank President Christine Lagarde on Monday said the global economic order backed by the US dollar was “fracturing” and made a pitch for the euro as a global reserve currency.
“The global economy thrived on a foundation of openness and multilateralism underpinned by US leadership,” Lagarde said in a speech at the Hertie School in Berlin.
Washington’s support for a rules-based international system and the dollar as a reserve currency had “set the stage for trade to flourish and finance to expand”.
The persistence of that US-led economic order over the past 80 years had “proved immensely beneficial to the European Union”.
“But today it is fracturing,” she said in an apparent reference to global trade tensions fuelled by US President Donald Trump’s threat to impose sweeping tariffs on key partners.
“Multilateral cooperation is being replaced by zero-sum thinking and bilateral power plays. Openness is giving way to protectionism.”
The recent upheaval was also threatening “the dominant role of the US dollar”, she said.
The disintegration of the global economic order would “pose risks for Europe”, Lagarde said.
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