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The European Central Bank’s annual review of the euro’s international role, published on 2 June, contains a finding that received almost no attention: industry reports cited by the ECB indicate that during the opening weeks of the Iran war, some ships paid for passage through the Strait of Hormuz in renminbi and in crypto-assets. The euro, stable at roughly 20 percent of global reserves, was not part of that story.
The headline numbers in the ECB’s 25th annual report on the international role of the euro read as reassurance. The composite index of international euro use, an average across debt issuance, bank lending, deposits, foreign exchange settlement, reserves and exchange rate regimes, rose by 0.2 percentage points at constant exchange rates in 2025, and by 0.9 points at current rates. International borrowers sold more euro-denominated debt last year than in any year since the single currency launched in 1999. In green and sustainable bonds, the euro overtook every rival to become the market’s most used currency, and the ECB found that investors treated it as a refuge during several bouts of market stress in 2025 and early 2026. Piero Cipollone, the Executive Board member quoted in the accompanying press release, framed the findings as evidence that the ECB has a coherent strategy for keeping the currency a cornerstone of global stability.
That is one reading. The more consequential material sits in the sections on alternative payment systems, where the ECB documents, with unusual candour for a central bank publication, how the war in the Middle East has accelerated a migration of cross-border money flows toward Chinese and crypto infrastructure. Neither of those rails runs through Frankfurt.
What the War Revealed About Payment Plumbing
CIPS, China’s renminbi settlement network, processed over a third more activity in the days around the war’s outbreak, according to the report, as the conflict began reshaping oil, gold and rates markets from late February onward. The ECB then cites industry reports indicating that some vessels paid for transit through the Strait of Hormuz in March and April 2026 in renminbi via CIPS, or in crypto-assets. By March, cross-border renminbi payments handled by Chinese banks for their customers had hit an all-time high near 1.4 trillion dollars, roughly 30 percent above the previous month’s total.
The acceleration is more significant than the raw figures suggest. CIPS had been losing momentum: total payment value grew just 3 percent in 2025, to around 25 trillion dollars, after expanding more than 20 percent the year before. The war reversed that deceleration within weeks. Beijing had also prepared the ground. New CIPS rules allowing settlement in currencies beyond the renminbi took effect on 1 February 2026, the same day President Xi Jinping publicly called for the renminbi to become a global reserve currency, a change that converts a national payment system into a prospective global one. The e-CNY, China’s digital currency, meanwhile dominates mBridge, the multi-central-bank digital currency platform linking China and Hong Kong with Thailand, the United Arab Emirates and Saudi Arabia, the latter two sitting at the centre of the Gulf energy trade now under stress.
The crypto channel is harder to quantify but, for the first time, sits in an official ECB publication as a documented means of paying for strategic maritime transit. It is a remarkable data point. When the dollar system became operationally risky in the Gulf, some of the money did not reroute to the euro. It rerouted to crypto-assets and Chinese rails. The report also flags A7A5, a stablecoin pegged to the Russian rouble launched in January 2025 to move money in and out of a sanctioned economy, and an Indian proposal to link the central bank digital currencies of BRICS members for cross-border settlement. The fragmentation the ECB has warned about for years is no longer a scenario. It has invoice numbers.
Stability Is Not the Same as Strength
The euro’s 20 percent share of global official foreign exchange reserves was broadly unchanged in 2025, the report shows, while the US dollar held at approximately 57 percent, the yen stayed below 6 percent, sterling below 5 percent, and the renminbi close to 2 percent. Over the decade since 2014, when Russia’s seizure of Crimea first put geopolitics back at the centre of reserve management, the euro has added roughly 1.5 points. That is progress, but of a glacial kind, and it conceals a less comfortable trend: the euro has been losing ground in global foreign exchange trading ever since the financial crisis, while the renminbi accounted for just under 9 percent of global currency turnover as of April 2025, having added 1.6 points in three years.
Reserve managers rarely touch their strategic allocations, the ECB observes, which is why reserve shares move at a glacial pace. Payment flows do not have that inertia. They move to whatever rail clears, settles and avoids sanctions risk, which is precisely what the Hormuz episode demonstrated. The currency composition of reserves is a lagging indicator; the plumbing of trade settlement is a leading one. On the lagging indicator the euro is stable. On the leading one it is largely absent from the new infrastructure being built.
Gold tells the same story from a different angle. Central banks added roughly 850 tonnes of bullion in 2025, the report estimates. That marks a slowdown from the 1,000-tonne-plus annual pace of 2022 through 2024, yet it remains well beyond anything seen in earlier decades, and gold prices have continued to reflect that official demand through the war months. Reserve diversification away from the dollar is real. It is simply not flowing into euros at any comparable scale.
An Awkward Backdrop for Thursday’s Decision
The report lands at a delicate moment for Frankfurt. Euro area inflation rose to 3.2 percent in May, with energy prices up 10.9 percent year on year according to Eurostat’s flash estimate, and money markets price a 25 basis point rate increase at the Governing Council meeting on 11 June with near certainty, per LSEG data. At the same time, Eurostat’s final reading showed the euro area economy contracted 0.2 percent in the first quarter, and the single currency has traded below 1.16 dollars, its weakest level since early April, as elevated Brent crude prices continue to feed the energy import bill. A currency aspiring to a larger global role is entering a tightening cycle with negative growth and a war premium attached to its energy supply.
European leaders formally asked the Council, the Commission and the ECB in June 2025 to take work forward on strengthening the euro as a reserve and transaction currency, and Christine Lagarde spent much of last year describing a global opening for the euro as confidence in US policy wavered. The 2026 report shows what happened when that opening met an actual crisis: the marginal flows went to CIPS, to gold, and to crypto-assets, instruments that settle outside any Western jurisdiction, a property that markets had already priced during the conflict, when crypto prediction markets traded on the Iran strikes before they happened.
The report’s own conclusion is that the euro’s potential rests on economic resilience, institutional integrity and geopolitical credibility, and that policymakers must act without delay. The data inside it suggests the delay is already being measured, in trillions of renminbi per month, by someone else’s payment system. The window the ECB describes is real, but windows in the international monetary system have a documented tendency to close while Europe is still drafting the framework to use them.
