The Central Bank of Ireland Governor said dollar dominance will decline over the long-term, but for now Europe lacks a single fiscal capacity of a safe asset like Treasuries that would mirror the US system.

“Frankly, Europe’s economic system is still not formed,” Makhlouf said at an economic conference in Aix-en-Provence, France. 

Currency movements in recent months, which have seen the euro appreciate against the dollar, are more attributable to investor concerns about the rule of law in the US, he added.

“It’s a bit far to say that’s suddenly going to lead to the euro replacing the dollar because the euro is not ready to do that,” Makhlouf said. 

Still, he echoed the calls of his colleagues at the ECB for Europe to use the current environment of global uncertainty as an opportunity to bolster its own security, lift barriers within its single market and increase joint-financing for shared objectives. 

“These opportunities to actually increase the standing of the EU, to strengthen its sovereignty and autonomy matter, and they need to be taken,” Makhlouf said.