Annual review shows resilient performance in international finance and reserves despite
new competitive challenges
The euro’s international role remained broadly stable in 2024, maintaining its position as the world’s second-most important currency, according to the European Central Bank’s latest annual review published Thursday.
A composite index of the international role of the euro – computed as a simple arithmetic average of the share of the euro across a broad range of indicators – remained broadly stable at both constant and current exchange rates, standing at around 19%, according to the ECB’s 24th annual review.
Strong Performance in International Finance
The euro showed particularly strong performance in international finance markets. Issuance of international loans and bonds denominated in euro was particularly dynamic in 2024, increasing by over 40% to nearly USD 900 billion. This was its highest level since the global financial crisis of 2007-09.
A significant driver of this growth came from U.S. companies issuing “Reverse Yankee” bonds. US firms alone issued nearly USD 95 billion in bonds, compared with about USD 60 billion in 2023.
Stable Reserve Holdings
The share of the euro in global official holdings of foreign exchange reserves remained stable at 20%. The ECB’s analysis of foreign official holdings of euro area government debt showed remarkable stability, with holdings reaching almost €1 trillion (or more than one-third of foreign holdings of euro area government debt securities) at the end of 2024.
Gold Reserves Surge
The report highlighted a significant trend in central bank reserves: central banks purchased more than 1,000 tonnes of gold in 2024, which is double the average annual amount seen in the previous decade. Global holdings of gold by central banks now stand at 36,000 tonnes, close to the all-time high of 38,000 tonnes reached in 1965 during the Bretton Woods era.
With the price of gold reaching new highs, the share of gold in global foreign reserves at market prices, at 20%, surpassed the share of the euro (16%). Survey data suggest that two-thirds of central banks invested in gold for purposes of diversification, while two-fifths did so as protection against risk.
New Competitive Pressures
The report identifies emerging challenges to the euro’s international role, particularly from U.S. initiatives promoting cryptocurrency adoption. The new US Administration has recently taken initiatives to support the global use of cryptocurrencies, including the creation of a “strategic bitcoin reserve” using USD 17 billion in bitcoin seized by the US Treasury.
The capitalisation of the stablecoin market reached about USD 190 billion at the end of 2024, roughly 7% of the capitalisation of the entire crypto-assets market. Almost all (99%) of stablecoins are pegged to the US dollar, presenting a potential competitive challenge.
Future Development
ECB President Christine Lagarde emphasized the importance of continued development of European financial infrastructure. “In a more volatile environment, accelerating progress on a digital euro is crucial for bolstering European sovereignty,” she stated. “Improving cross-border payment systems between the euro and other currencies will also increase resilience.”
The report concludes that the global appeal of the euro is underpinned by sound policies in the euro area and strong, rules-based institutions. Upholding the rule of law remains essential for maintaining, and potentially increasing, global trust in the euro.
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