"Sell America." The turmoil caused by Donald Trump's back-and-forth on tariffs has led to an unusual mantra spreading through the world of finance: Sell (some of) your American assets to avoid being too exposed to the whims of the US president. As a result, many investors have shed both their American stocks, their US bonds and their dollars. While the stock market has rebounded – at least temporarily – the greenback has still fallen nearly 10% against the euro since February.

Selling America is one thing, but what should one buy instead? The answer is far from obvious. Japan's economy is stagnant, China is not considered a reliable partner and emerging markets are extremely volatile. In theory, Europe could seize this opportunity. It may not be dynamic, but it is wealthy and the rule of law is respected. In that context, could the euro – the world's second-most traded currency, though still three times less important than the dollar – take on a greater role? The stakes are high; this is about European sovereignty, and with it, Europe's ability to fund itself more easily. Ultimately, it comes down to shifting the "exorbitant privilege of the dollar" toward an "exorbitant privilege of the euro."

"There is an opportunity that is opening now (...) but my conclusion is that it is not going to be granted to us; it should not be taken as a given," warned Christine Lagarde, president of the European Central Bank, on June 5. To take advantage of the chaos caused by Trump, she explained, Europe needs to reform. Above all, it must address its main weakness, namely fragmentation among the 27 countries (20 in the eurozone).

Creating a large-scale debt market

This is especially clear when it comes to funding the economy. While the US has $29 trillion in sovereign bonds – until recently considered the world's safest assets – the European Union (EU) has 27 separate sovereign debt markets. Germany's − seen as the safest − is worth $2.5 trillion, which is nearly 12 times smaller. For an American or Japanese investor looking to put their money in Europe, this makes things complicated. To gain financial autonomy, Europe must create a large-scale debt market capable of competing with that of the US.

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