FRANKFURT — The euro could become a viable alternative to the dollar, earning the 20-nation bloc immense benefits, if governments could only strengthen the bloc’s financial and security architecture, European Central Bank (ECB) President Christine Lagarde said on Monday.

Unnerved by erratic US economic policy, global investors have been reducing their exposure to dollar assets in recent months but many have opted for gold instead, not seeing a direct alternative.

In fact, the euro’s global role has been stagnant for decades now since the European Union’s financial institutions remain unfinished and governments have shown little appetite to embark on more integration.

“The ongoing changes create the opening for a ‘global euro moment,’” Ms. Lagarde said at a lecture in Berlin. “The euro will not gain influence by default — it will have to earn it.”

For this, Europe needs a deeper, more liquid capital market, must bolster its legal foundations and needs to underpin its commitment to open trade with security capabilities, Ms. Lagarde argued.

The dollar’s role has been on the decline for years and now makes up 58% of international reserves, the lowest in decades, but still well above the euro’s 20% share.

Any enhanced role for the euro must coincide with greater military strength that can back up partnerships, Ms. Lagarde said.

“This is because investors and especially official investors also seek geopolitical assurance in another form: they invest in the assets of regions that are reliable security partners and can honor alliances with hard power,” Ms. Lagarde said at a Hertie School lecture.

Europe should also make the euro the currency of choice for businesses invoicing international trade, she said. This could be supported by forging new trade agreements, enhanced cross-border payments and liquidity agreements with the ECB.

Reforming the domestic economy may be more pressing, however, Ms. Lagarde said. The euro area capital market is still fragmented, inefficient and lacks a truly liquid, widely available safe asset investors could flock to, she said.

“Economic logic tells us that public goods need to be jointly financed. And this joint financing could provide the basis for Europe to gradually increase its supply of safe assets.”

Joint borrowing has been a taboo for some key euro zone members, particularly Germany, which fears that its own taxpayers could end up having to pay for the fiscal irresponsibility of others.

If Europe succeeded, the benefits would be large, Ms. Lagarde said. The investment inflow would allow domestic players to borrow at lower cost, insulate the bloc from exchange rate movements and protect it against international sanctions. — Reuters

LONDON — Britain will spend a record 3 billion pounds ($4 billion) to boost training opportunities, the government said on Tuesday, part of a broader strategy to train locals to fill gaps in the labor market and reduce reliance on foreign workers.

The investment will “refocus the skills landscape towards young, domestic talent” by creating 120,000 new training opportunities in key sectors such as construction, engineering, health and social care, and digital, a statement from the government’s education department said.

More than one in five working-age Britons do not have a job and are not seeking one, with the latest official data showing the inactivity rate at 21.4%, having steadily risen since the COVID-19 pandemic.

The Labour government has been under pressure to cut immigration following the local election success of the right-wing, anti-immigration Reform UK party in May, and has since set out plans to tighten citizenship rules, restrict skilled worker visas to graduate-level jobs, and push firms to train locals.

Prime Minister Keir Starmer declared that the open border experiment was over when the measures were set out.

Tuesday’s statement said a planned 32% rise in the immigration skills charge, designed to dissuade businesses from hiring foreign workers, would deliver up to 45,000 additional training places to “upskill the domestic workforce and reduce reliance on migration” in priority sectors.

Businesses have said they cannot hire enough staff locally, warning that the tougher rules would harm the economy unless they were accompanied by a fundamental overhaul of the country’s skills training system. — Reuters