Challenge to dollar supremacy a long way off, central bankers say

Written by Francesco Kaiba and Blaz Korrani

Sirmra, Portugal (Reuters) -There is no possibility of a major challenge to put the dollar as the world’s backup currency anytime.

Economic, commercial and security policies have motivated US president Donald Trump questions about whether the American currency, which represents 58 % of the world’s reserves, could remain in the center of the global monetary system.

European Central Bank President Christine Lagarde, who said that the euro could become an alternative to the dollar if the currency area in Europe has enacted necessary reforms, could be seen in 2025 as a “central” in this regard.

A committee with it, the British, the Japanese and the Koreans, said: “(but) for a major change, it will take a lot of time and a lot of effort.”

She pointed out that “investors are looking for options” in a climate characterized by uncertainty and inability to predict and that there is evidence that the euro was benefiting from that.

“This will not happen just like this overnight. He didn’t do it historically,” she said. “But it is clear that something was broken. Whether it is possible, or whether it will continue to break it – I think the jury is outside.”

The Governor of the Bank of Japan, Kazo Oda, also indicated that any major change depends on structural reforms.

He said: “It is somewhat about what areas such as Europe or China will do in terms of improving the efficiency or comfort of their currencies,” noting an example of efforts in integrating the capital market in the euro area.

Andrew Billy, the governor of the Bank of England, said any change in the situation of the dollar was far away.

“I don’t see … a kind of main shift at the present time,” he said, saying that any spare currency should have provided supplies of safe assets in the market that could be used for side and security purposes.

Korea Governor Rai Chang Young said that the possibility of a long shift in the feelings of the dollar was the subject of discussion for some, even when they retain their rights in dollars.

“It seems that people are talking about it,” he told the committee. “

Lagarde told a recent fans in Berlin that there is an opening for a “European Universal Moment”, if it earns it.

She said that Europe will need to build a deeper and more liquid capital market, enhance its legal foundations and support its commitment to open trade with security capabilities.

While the current share of the dollar of international reserves is its lowest level in decades, its 58 % balance is still much higher than the euro share by 20 %.

(Written by Mark John. Editorial by Mark Potter)