Photo by: Gary Raynaldo  /   Benoît Georges Cœuré , European Central Bank Executive Board member, defends the Euro Currency in New York at the Council On Foreign Relations Feb. 15, 2019.

By Gary Raynaldo   DIPLOMATIC TIMES

Benoît Georges Cœuré , European Central Bank Executive Board member, had good and  bad news regarding the global role of the Euro.  Speaking in New York at the Council On Foreign Relations Friday,  Cœuré  stated that many naysayers predicted the demise of the euro, which is the official single currency of 19 of the 28 member states of the European Union, long ago. The central banker  proudly declared the euro has survived and is still here since it was rolled out in 1999.  Some 60 percent of Europeans support the single currency,  Cœuré pointed out.

“Never underestimate the strength and resilience of the single currency,”

Benoît Georges Cœuré , European Central Bank Executive Board

Ok, now the bad news.    “The role of the  euro globally has actually deceased due to the 2005-2006 global crisis. The euro has not lived up to  expectations when it was created and introduced back in 1999”,  Cœuré admitted.

Credit: wikipedia / A euro light sculpture at the European Central Bank in Frankfurt.

The title of Cœuré speech delivered at the CFR was:      The Euro’s Global Role In A Changing World: A Monetary Policy Perspective

“This year marks the 20th anniversary of the euro’s creation, an event which has triggered much reflection on the single currency’s successes and challenges,”  Cœuré

The euro’s international role has declined since the mid-2000s

 Index of the euro’s international role

(percentages; four-quarter moving averages)

Credit: European Central Bank.   Sources: BIS, IMF, CLS, Ilzetzki, Reinhart and Rogoff (2017) and ECB calculations. Notes:  Arithmetic average of the shares of the euro at constant exchange rates in stocks of international bonds, cross-border loans, cross-border deposits, foreign exchange settlements, global foreign exchange reserves and exchange rate regimes. Data on the share of the euro in global trade invoicing were not available; those on foreign exchange settlements are at market exchange rates. The latest data are for the fourth quarter of 2017.

Photo by Gary Raynaldo / Cœuré  delivers speech before audience at the Council on Foreign Relations in Manhattan Feb. 15, 2019.

Cœuré States That It Is Crucial To Strengthen The World’s Second Global Currency-The Euro 

Photo by: Gary Raynaldo / Cœuré  seated with Michelle  Caruso-Cabrera, Contributor, CNBC, during Council on Foreign Relations presentation Feb. 15,  2019.

Cœuré noted that the euro is the second most used currency in the world after the US Dollar. However, the euro is “lagging the dollar by quite a wide margin,” the central banker acknowledged .   Cœuré  said there were several factors for the lagging global role of the euro. He said the main factor is the  fact there is no single safe asset in the EU in order to provide stability and safety of the euro in times of economic crisis such as was seen in 2005-2006 global recession.

“Whenever international investors look for safety, they turn to the U.S. Treasury.  The euro area doesn’t have that. We don’t have  a single safe assets which international investors can turn to in times of sharp decline in the world economy. ”   

Benoît  Cœuré 

Photo by: Gary Raynaldo / Cœuré  seated with Michelle  Caruso-Cabrera, Contributor, CNBC, during Council on Foreign Relations presentation Feb. 15,  2019.

 Cœuré  stated that bond supervision is being integrated more and more now  in Europe to provide a safety net for investors. However,  Cœuré  stressed the need for single safe asset.  “We need single safe asset. But the ECB does not have much say about how and when to do this. It is a political discussion. It will be a very long journey. The euro is a long-term project.”

He said the ECB supports efforts to improve the design of Economic and Monetary Union (EMU), and “these efforts will also, indirectly, foster a stronger international role for the euro. Second, a stronger global role for the euro may have tangible consequences for the conduct of monetary policy.”

QUESTION:    ” How Does The ECB view  preparations for  BREXIT disruptions?”   

ANSWER:    “We’ve been inundated by the European Commission on the European side and by Her Majesty’s Treasury to work closely with the Bank of England  to map financial stability risks in case of a no deal. And we have been working very actively throughout 2018 and we are still working and talking very closely with Bank of England and we’ve  done it in 4 areas,  clearing  derivatives,  un-cleared  derivatives,  insurance,  and access to data in the financial industry.  Conclusion: risks were really concentrated around clearing. There was a need for a solution to maintain the possibility for European firms to clear derivatives and swaps in London. For all three other areas including uncleared derivatives,  The industry was pretty well prepared. There was a need to facilitate migration, transfer of contracts,  but we did not see a major financial stability risk. So, the bottom line is we believe the financial sector is well prepared for BREXIT… for a  NO Deal  Brexit. We don’t see  the  financial system as being  a main area of concern, in case of a NO DEAL BREXIT because it has been very well prepared by the industry,”    Cœuré . 

Will Cœuré become the next president of the European Central Bank?

The French central banker is rumored to be a top contender for the job of President of the Frankfurt-based ECB, when the current ECB boss Mario Draghi vacates the post at the end of October.  When asked if he wants to be next ECB president, he smiled and said:     “I was asked this on a TV show if I wanted the job. I said ‘Who wouldn’t?!’ “