In a keynote address hosted by the Jacques Delors Centre, the President of the European Central Bank delivered a compelling vision for Europe’s economic and financial leadership amid growing global fragmentation.
The Spotlight event on 26 May titled “Europe’s Role in a Fragmented World” drew a full house in the Auditorium Friedrichstraße, with many more following live online. Hertie School President Cornelia Woll opened the event by remembering Henrik Enderlein on the occasion of the fourth anniversary of his passing on 27 May. She paid tribute to his lasting legacy before reflecting on the fragmentation currently shaping world politics.
In her much-anticipated keynote, Christine Lagarde described how the post-war economic system – built on openness and multilateralism under US leadership – is now under pressure. Fragmentation and zero-sum thinking are replacing cooperation, and questions are emerging about the future dominance of the US dollar.
She argued that these global shifts pose clear risks for Europe, whose economy is tightly integrated in global trade. But she also stressed that this uncertainty creates an opportunity: with the right strategy, the euro could grow into a stronger international currency, helping to lower borrowing costs, shield Europe from exchange rate shocks, and strengthen its geopolitical resilience.
Three foundations for a stronger euro
The President of the European Central Bank outlined three essential pillars that Europe must reinforce to strengthen the euro’s international role: geopolitical credibility, economic competitiveness, and legal and institutional strength.
According to Lagarde, a credible geopolitical foundation requires more than just strong trade relationships – it also demands security alliances. Lagarde noted that while Europe is a major actor in global trade and holds the largest network of trade agreements, this alone is not enough to close the gap between the euro’s role in trade and its status as a reserve currency. Europe must follow through on efforts to rebuild hard power and deepen defence cooperation to become a more trusted and resilient global actor.
Lagarde stressed that a strong economic foundation is essential to support demand for euro-denominated assets, noting the potential for a virtuous cycle, where stronger growth attracts investment, deeper capital markets fuel expansion, and the euro becomes more attractive globally. She called for decisive action to complete the Single Market, support high-growth sectors, and build a savings and investment union. Strategic industries and European public goods like defence should be supported at the EU level rather than through fragmented national approaches.
The ECB President argued that a robust legal and institutional foundation underpins investor confidence in the long-term value of a currency. Lagarde highlighted the euro’s credibility, grounded in independent institutions such as the ECB, and the EU’s commitment to the rule of law and predictable policymaking. Reforms such as expanding qualified majority voting could enable more decisive action and help safeguard the institutional stability that makes the euro a reliable global currency.
A call to action
Lagarde concluded by urging European policymakers to act with urgency and ambition, emphasising that global currency status is not granted by default, but earned through credible and strategic policy choices. In her words, “Europe has a prime opportunity to take greater control of its own destiny. But this is not a privilege that will simply be given to us. We have to earn it.” Citing economist Robert Triffin, she reminded the audience that the strength of a reserve currency depends on the decisions of the countries behind it.
Following the keynote, Johannes Lindner, Co-Director of the Jacques Delors Centre, invited Christine Lagarde to elaborate on her key points in a discussion, which was followed by a Q&A session with the audience. Several Hertie School students took the opportunity to ask the ECB President about the central bank’s mandate, the new policy of the US government, and the fragmented capital markets in the EU, among other topics.
Watch the recording of the event below.
The event was part of the Pariser Platz Dialogue, a series of high-level discussions organised by the Jacques Delors Centre and supported by the German Federal Foreign Office.