PPCC: Pisitófilos Creditófagos. Primavera 2026

[Derby]

https://www.ft.com/content/5f02bb2e-f621-4369-8ce0-55f6d6b839c7

The euro’s urgent need, Katie Martin

Europe must finally grasp the opportunity to develop the single currency as a reserve asset


On the plus side, a bunch of reforms in recent years, often forged in the teeth of crisis, do help to make the euro ready for prime time © Andrey Rudakov/Bloomberg

Europe clearly sees the opportunity to bump the dollar off its perch. Whether it will seize it is another matter. And the goldbugs are not sticking around to find out.

Banging the drum for the euro as a currency that can truly rival the dollar in reserves, in trade and as the glue that binds the global financial system together is, of course, nothing new. But the banging became significantly louder a year ago after the US torched longstanding global alliances with US President Donald Trump’s ill-conceived slate of worldwide trade tariffs.

European Central Bank president Christine Lagarde’s assertion in June last year that we were approaching the age of the “global euro” gave hope that the dreamy ambition around the inception of the common currency might finally translate into serious practical action.

And yet we are clearly still in the stage of worthy words and earnest calls to action, which picked up significantly in recent weeks.

In a speech in April, Philip Lane, an executive board member of the ECB, reiterated the good news and bad news on this front. On the plus side, a bunch of reforms in recent years, often forged in the teeth of crisis, do help to make the euro ready for prime time. The region’s banking system is now safer, its fiscal backstops are stronger, the ECB boasts a tasty alphabet soup of safeguards against bond-market dysfunction. Common bonds backed by EU member states do already exist, so the principle has been tested. But they are just too small to serve the purpose of a serious reserve asset and they are more clunky to trade than either French or German government bonds.

Truly pushing this project forwards “ultimately depends on sufficient political will and mutual trust”, he said.

A sense of urgency would not go amiss here, as Lane and others have suggested. Even back in November, a trio of prominent European finance thinkers — Philipp Hildebrand, Hélène Rey and Moritz Schularick, argued in a column for Vox that the region “must address the overwhelming dominance of US capital markets” and that “time is short”. Joint European financing through defence bonds with sovereign status, regular issuance and full eligibility for the financial plumbing at the ECB are a key way to get this done.

“The urgency cannot be overstated,” they wrote, mostly with an eye on financing the defence of Ukraine and “shifting US commitments”. And this was before the latest US two-fingered salute to Nato in the Iran war.

They’re right. And I’ve yet to speak to any large bond investor who would turn their nose up at joint European sovereign-style bonds issued at scale. Private investors would snap these things up. But the system appears to be sleeping through this fire alarm and moving towards a solution only in slow motion.

We know the desire to move away from the dollar is real, because you can see it in flows into gold — an asset that, unlike the euro, doesn’t have any centralised infrastructure around it. Gold is rushing up the ranks of reserve managers’ preferred assets. It now accounts for nearly a third of central bank reserves, Deutsche Bank’s research institute pointed out in a note this week, while the slice held in dollars has dropped over a period of several years from over 60 per cent to 40 per cent.

Now, for sure, a large part of the larger allocation to gold is in fact the result of a big jump in the gold price over the past couple of years. But, wrote Mallika Sachdeva and Michael Hsueh at the bank, “there is a genuine volume driver underlying this: central bank purchases have arguably themselves been behind significant price momentum”.

Emerging market central banks, in particular, are enthusiastic gold buyers, particularly after the freezing of Russia’s reserves after the full invasion of Ukraine in 2022. The stateless nature of gold gives it a unique allure for any government fearing a lockdown of their foreign-currency savings, whether they are in dollars, euros or anything else. Nonetheless, this urge among official reserve managers to back out of the dollar is an important expression of the notion that big investors’ faith in the predictability and reliability of the US has been seriously dented.

If this continues, we could be looking at a gold price of $8,000 an ounce or even higher over the next five years, the Deutsche Bank analysts reckon, well above today’s gold price of around $4,500.

None of this suggests that investors are minded to sell dollars, as such. They are just unusually interested in filling their coffers with other things too, as a result of the obvious shifts in geopolitical alliances and rivalries.

The recent history of financial markets is littered with missed opportunities. Lots of governments passed up the chance to borrow for nothing in the zero-interest-rate years — a key to financing energy and infrastructure on the cheap that we will probably never see again. Most of the world failed to get the green energy memo after Russia’s assault on Ukraine, which leaves Europe and Asia in particular in a bind over the Middle East today. It is entirely plausible that Europe will miss this chance too, but it would be a mighty shame.

[Derby]

https://www.bloomberg.com/news/articles/2026-05-02/us-approves-nearly-9-billion-in-weapons-sales-to-mideast-states

US Approves Nearly $9 Billion in Weapons Sales to Mideast States

Secretary of State Marco Rubio has approved expedited arms transfers to Israel, Kuwait, Qatar and the United Arab Emirates, bypassing a standard congressional review to rush air defense missiles and laser guidance systems to the Middle East as the Iran war ceasefire seems ever more fragile.

The agreements amount to nearly $9 billion, according to the State Department.(...)