–ECB’S Panetta Hails Steadiness in Comparison with Sovereign Debt Crisis
By Laurie Laird
LONDON (MaceNews) – The euro’s share in global transactions remained at 19% in 2020, a performance hailed as an accomplishment by a senior ECB official given the low rates of return in the bloc.
The share of euro transactions “has not decreased; it has remained constant,” said ECB Executive Board member Fabio Panetta, addressing reporters ahead of the release of the ECB’s annual report on the international role of the euro. “The policies implemented during the [Covid] crisis gave confidence in the euro.”
The euro accounted for as much as 24% of global transactions between 2004 and 2006, before the 2008 recession and the subsequent European sovereign debt crisis. “The euro is a young currency. When the shock hit … 10 years ago, investors saw it as riskier,” said Panetta, adding that investors have raised no questions over the survival of the euro as many did when Greece required multiple bailouts from the European Commission and the International Monetary Fund.
The euro’s share of in global official foreign exchange reserves decreased by 0.7 percentage points, largely due to sub-zero interest rates in the euro zone, according to Panetta. “Economies with a large share of the euro in official reserves typically have strong linkages with the euro area and use the euro as an anchor currency,” according to the report.
By contrast, global reserves held by Chinese renminbi increased by 0.3 percentage points in 2020, while Canadian dollar reserves rose by 0.2%, according to the ECB report.
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Contact this reporter: laurie@macenews.com.
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