Greater use of the euro internationally “supports the ability of the ECB to achieve price stability by increasing the international impact of euro-area monetary policy and thereby influencing foreign demand, as well as domestic demand,” Lane said Wednesday in a speech in Shanghai.

In addition, a stronger international role for the common currency would reduce the sensitivity of the bloc’s import prices to external shocks by fostering invoicing in euro, he said.

ECB officials have repeatedly advocated an expanded global footprint for the euro to bolster European sovereignty in the face of dwindling support from the US, as well as increase trade and lower borrowing costs. 

Should the currency’s international status be boosted, Lane said higher ECB interest rates would weaken foreign demand and, in turn, bolster inflation-fighting efforts.

“A tightening of euro-area monetary policy makes it more expensive for foreign entities to source euro denominated funding, which weighs on demand in economies that use the euro, particularly for debt issuance, as well as for trade invoicing and funding of working capital,” he said.

To increase the euro’s appeal, the ECB has already begun offering euro liquidity to most central banks around the world.

“The monetary-policy case for liquidity lines is reinforced by their dynamic interaction with other policy areas,” Lane said.

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