The euro is rapidly losing its ground as an international currency. Use of the euro has significantly decreased over the past year. ECB experts link this with growing concerns over political risks and the expansion of the currencies of developing countries, primarily China.
The yuan confidently extends gains, replacing the euro as a funding currency. However, many central banks still continue to increase their reserves in euros. For regulators this means that the political risks are beginning to decrease and the European economy is expanding.
“The very simple message is that the euro has continued to lose ground as an international currency. But the euro is unchallenged as the second most important currency in the international monetary system,” ECB board member Benoit Coeure said on Wednesday. Reflecting the growing importance of the Chinese currency, the ECB not only placed around 500 million euros worth of its foreign currency reserves into RMB but also plans to continue purchases. "We believe that the renminbi has a role in a diversified portfolio. We want our reserves to be liquid and readily available. If that step is successful, we’ll do more, at a later stage," Coeure added.
The ECB data showed that the US dollar remains the most important currency in the world, holding just below two thirds of the global market for international debt, international loans and foreign reserves.
