The recent surge in oil prices due to the Iran conflict starkly exposed the dollar's overwhelming dominance, forcing nations to buy expensive crude with dollars, even selling gold reserves. This reinforces former Treasury Secretary John Connally's 1971 warning: 'Our dollar, your problem.' Europe's second currency, the euro, holds only 18% of global trade invoicing despite representing 20% of reserves. This gap reflects fixable flaws: fragmented debt markets, incomplete capital integration, and a shortage of safe euro assets. The current crisis presents a unique chance to strengthen the euro, but China's expanding swap lines and renminbi infrastructure pose a significant challenge.

Europe must act decisively. Key reforms include dramatically expanding safe euro assets via joint issuance for short-term needs and climate/defence projects. Deepening capital markets requires a pragmatic '28th regime' for cross-border business and empowering the European Securities and Markets Authority. Crucially, the ECB must scale its international liquidity facilities far beyond the current €4bn, mirroring the Fed's $600bn 2008 support, and foster a deep offshore euro financing market. Aligning European stimulus with euro invoicing in supply chains and trade agreements is essential.

Beyond finance, Europe must lead in digital currency. It should leverage its advanced Markets in Crypto-Assets Regulation to promote euro-denominated stablecoins, countering the dollar's 99% share. Simultaneously, developing a digital euro with interoperability, tokenised deposits, and post-quantum cryptography infrastructure offers technological leadership. The Iran crisis underscores the structural need to reduce dollar dependency, making euro strengthening vital for energy buyers, debtors, and traders worldwide.