ECB's Lane says euro may gain as investors question dollar

ECB Chief Economist Philip Lane said the euro could play a larger role as some investors reassess the dollar amid U.S. policy shifts, and he called for expanding common euro safe assets while stressing member states must keep debt paths sustainable.

ECB Chief Economist Philip Lane said the euro could take a larger role in investors' portfolios as some re-evaluate the dollar following shifts in U.S. policy. He made the remarks on Friday at an event in Kolding, Denmark. Other ECB officials, including Bank of France chief François Villeroy de Galhau and ECB President Christine Lagarde, have said U.S. protectionist moves and challenges to Fed independence have dented confidence in the dollar. The ECB has been working to strengthen the euro's international standing. Key points: - Philip Lane said a more "domestically oriented" U.S. economy suggests the dollar offers less of a hedge against global risk. - Lane said the dollar should remain the largest international currency but there is scope for a shift toward a less unipolar international monetary system. - Bank of France chief François Villeroy de Galhau said actions that undermine Fed independence have damaged confidence in the greenback and could encourage diversification. - ECB President Christine Lagarde said making the euro more attractive could lower borrowing costs and provide protection from currency fluctuations and sanctions. - The euro faces drawbacks, including fragmented capital markets across the 21 nations using the currency and a limited pool of low-risk euro assets. - Lane said there are complementary routes to expand common euro debt, but the safety of such securities depends on all member states maintaining sustainable national debt paths. Summary: Greater use of the euro in international portfolios could reduce borrowing costs and offer protection from currency swings and sanctions, according to ECB officials. Undetermined at this time.