The European currency has lost ground as a foreign exchange reserve during the pandemic.

According to a report published on Wednesday by the European Central Bank, the weight of the euro as a reserve currency in the world has decreased in 2020 and against the backdrop of low interest rates in the euro zone. The report of the European Central Bank reveals that the low level of interest rates in the euro zone (...) may have deterred investors from increasing their bond portfolios in euros. Thus, the single currency represented 21.2% of world foreign exchange reserves at the end of 2020, expressed at constant exchange rates, i.e. a decline of 0.7 percentage point.
The dollar remains the predominant reserve currency, stabilizing at 59%, while the share of other currencies continues to rise, driven in particular by the Chinese yuan. In terms of international deposits, the share of the euro fell by 3 points, to 17%, as investors preferred to invest the proceeds of asset disposals in dollar deposits so as not to run out of liquidity after the outbreak of the pandemic.
However, the euro remains the second most used currency in the world after the dollar. "The euro remains unquestionably the second most widely used currency in the world after the US dollar," said Christine Lagarde, President of the ECB. The share of the euro in the various international currency indicators has remained stable, averaging around 19% in 2020. The share of the euro in global foreign exchange reserves has declined, as has the share of the euro in issues of debt securities denominated in foreign currencies and in outstanding international deposits.