Governor Krogstrup emphasized that rules-based international cooperation has been the foundation of Europe’s prosperity. However, this cooperation is under pressure. This also means that the international monetary system may be undergoing change. For decades, the dollar has been the central currency used in international trade and investments, seen as a safe haven and a guarantor of stability. This is still the case today. However, market reactions to the U.S. tariff announcements in April indicated that the dollar’s role in ensuring stability in global markets may be changing.
Signe Krogstrup stressed that Denmark, as a small, open EU country, benefits from stability in international financial markets and payments, as well as from our fixed exchange rate policy towards the euro. But potential changes entail both risks and opportunities. Krogstrup pointed to steps that can strengthen Europe’s resilience in volatile global financial markets. We can become more robust if the EU single market is strengthened. It is also important to continue developing the infrastructure for payments – including across borders and currencies.
If the dollar’s role in ensuring stability changes, what would it take for the euro to play a greater global role? The literature points to factors that are important for global currencies – such as strong institutions, sound economic policy, financial stability, and liquid markets. All factors that will strengthen European resilience in any case, and which align well with the current political agenda in Europe.
Signe Krogstrup’s remarks at the debate are only available in English.
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