By Piroska Nagy Mohácsi
October 16, 2026

LONDON—As the global monetary order experiences a period of profound fragmentation, the European Union stands at a critical juncture. The landscape of international finance is shifting, moving away from the unipolar dominance of the U.S. dollar toward a more fractured, multi-polar environment. In this evolving context, the euro remains the dollar’s most credible rival, carrying the weight of the world’s second-largest economy and representing a bloc committed to the rule of law and democratic transparency. Yet, for the euro to evolve from a regional success story into a genuine, functional counterweight to the greenback, the European Union must undertake a significant transformation. It must strengthen its own financial foundations and aggressively expand its reach, beginning with the necessary step of integrating those member states that remain outside the eurozone despite their treaty-based obligations.

The current global economic climate is defined by the rise of competing currency blocs. Geopolitical tensions, the weaponization of financial sanctions, and the search for alternatives to dollar-denominated trade have created a vacuum that many nations are eager to fill. While various contenders, including the Chinese renminbi and the potential for a BRICS-backed currency, have been discussed as challengers to the dollar, they lack the institutional depth, liquidity, and open capital markets that define the euro. The euro is, by all traditional metrics, the only currency currently capable of offering a viable, large-scale alternative to the U.S. dollar. However, the gap between the euro’s potential and its current reality is vast.

For the euro to fulfill its promise, it must first undergo a process of internal maturation. The irony of the current situation is that the European project often feels incomplete. While the currency is used by millions of people across twenty member states, the European Union itself remains a collection of disparate fiscal regimes. For the euro to become a truly global currency, it must first become, in a deeper sense, more European. This means bridging the gap between the common monetary policy overseen by the European Central Bank and the fragmented fiscal policies that still dominate national capitals.

The argument for the euro’s expansion is not merely one of economic convenience; it is a structural necessity for the survival and influence of the European Union in the twenty-first century. A fragmented Europe, characterized by multiple currencies and varying levels of commitment to the European project, is a Europe that is inherently less influential on the global stage. When member states that have not yet adopted the euro—despite being legally obligated to do so—remain outside the fold, it weakens the coherence of the Union’s external monetary position. Expanding the eurozone to include these members would not only solidify the internal market but also demonstrate a level of unity and purpose that is currently missing from the European narrative.

The historical context of the euro’s creation was rooted in the vision of a unified European continent that could stand as an equal to the United States. In the decades since its inception, the euro has successfully navigated crises, including the sovereign debt crisis and the economic fallout of global pandemics. Yet, it has struggled to break the dollar’s stranglehold on global reserves and trade invoicing. To change this, the European Union must address the underlying fragility of its financial architecture. This involves deeper integration of capital markets, which would allow for more efficient allocation of resources across the continent and provide global investors with the depth and liquidity they require to hold large quantities of euro-denominated assets.

Liquidity is the lifeblood of a global reserve currency. Without a unified, deep, and highly liquid market for European government bonds, the euro will continue to play second fiddle to the U.S. Treasury market. While progress has been made through initiatives like the NextGenerationEU recovery fund—which issued joint debt for the first time on a large scale—more permanent mechanisms are required. A common safe asset is not just a fiscal convenience; it is a geopolitical tool. It provides central banks and sovereign wealth funds around the world with a secure place to park their capital, thereby embedding the euro into the plumbing of the global financial system.

Furthermore, the expansion of the euro is a matter of political credibility. The European Union has long held the principle that the euro is the currency of the entire Union, with exceptions granted only under specific, limited circumstances. Yet, as time has passed, the reluctance of some member states to join the eurozone has created a two-speed Europe that undermines the vision of a truly integrated bloc. By prioritizing the inclusion of these remaining states, the European Union would send a powerful signal to the rest of the world: that it is a serious, unified, and growing entity, rather than a loose confederation of states with competing interests.

The global monetary order is becoming increasingly fragmented, as evidenced by the rise of regional trading arrangements and the growing interest in digital currencies and alternative payment systems. In this environment, the European Union has a rare and fleeting opportunity to shape the emerging system. If Europe chooses to remain inward-looking or satisfied with its current, partial integration, it risks being marginalized as the global economy drifts toward a new, unpredictable equilibrium. If, however, it chooses to complete its internal financial architecture and expand the reach of the euro, it could play a decisive role in defining the rules of the next monetary era.

The challenges are undeniably significant. The political resistance to fiscal integration, the diverse economic conditions of member states, and the inherent difficulties of coordinating policy across twenty-plus nations are not to be underestimated. However, the cost of inaction is higher. The world is looking for alternatives to a dollar-centric system that is increasingly viewed through the lens of political risk. If Europe cannot offer a cohesive, unified, and robust alternative, other actors will inevitably fill that space. The path forward requires a renewed commitment to the principles of integration that founded the European Union.

Strengthening the euro’s international role is not an end in itself; it is a means to secure European sovereignty in an age of great power competition. When the currency of a bloc is used globally, it confers significant advantages, from lower borrowing costs to the ability to project power through financial diplomacy. By focusing on the fundamentals—financial integration, the inclusion of all member states, and the development of deep, liquid capital markets—the European Union can ensure that the euro becomes the cornerstone of a more stable, multi-polar international financial system.

The trajectory of the euro will be determined not by external forces, but by the decisions made in Brussels, Frankfurt, and the capitals of the member states. The opportunity to shape the future of the global monetary order is at hand. It is an opportunity that demands vision, political courage, and a recognition that the strength of the euro is inextricably linked to the unity and cohesion of the European Union itself. For the euro to truly reach its potential on the global stage, Europe must finally embrace the project of a fully integrated, common currency area in practice, not just in name. This is the necessary, if difficult, path toward ensuring that Europe remains a central player in the global economy for decades to come.