Will the Euro be the true Greenback in the future?

The dollar is involved in nine out of ten foreign exchange transactions and still accounts for 58% of total foreign exchange reserves. Commodities, interest rates, derivatives: it is the dominant currency in almost all markets, with one exception: green bonds, which are mainly denominated in euros and whose take-off is mainly driven by companies and public actors based in Europe. In 2025, the green bond market is expected to see another record volume of issuance. It remains to be seen whether the US counteroffensive on social and environmental responsibility will be a threat or an opportunity for sustainable finance. There are many arguments in favor of the latter hypothesis.

Since the 2015 Paris Climate Agreement and the introduction of applicable principles by the International Capital Market Association (ICMA), the green bond market has skyrocketed. Although still modest in global terms (USD 2.9 trillion, or just 2.5% of total bond outstanding), its size has more than quintupled over the past five years. The Eurozone has been the driving force behind this takeoff, followed at a distance by the United States and China. In terms of cumulative issuance, the single currency accounts for the lion's share: 46% of the market in 2024, compared with only 28% for the US dollar (see chart).

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