The European Central Bank, in its latest assessment of the euro’s international role, shows that the single currency’s share of international debt issuance fell about 1.5 percentage points in 2013, extending a decline that began at the onset of the global financial crisis.

The share of outstanding international debt securities issued in euros had fallen from 31pc in 2007 to 25.3pc by the end of last year.

Over the same period, the share of dollar-denominated debt rose at the expense of all other currencies, from 44.3pc to a historical peak of 54.8pc.

One reason for this trend is that it has been cheaper until recently to borrow in dollars and swap the proceeds into other currencies. The ECB also notes the effects of ultra-loose US monetary policy; and of a surge in issuance in Latin American countries that tend to favour more liquid dollar-denominated markets.

There are signs of the euro regaining ground this year: figures from Dealogic showed that emerging markets had issued 39.4bn euros worth of euro-denominated bonds by the end of June, almost equalling 2013’s total for the full year.

If France is serious about promoting use of the euro to challenge the dollar’s dominance of

global finance, it will find itself fighting the recent trend in markets. An ECB report shows the scale of the task French ministers will face if they want to engineer a lasting change in the euro’s use by the private sector

Yet the ECB’s report shows the scale of the task French ministers will face if they want to engineer a lasting change in the euro’s use by the private sector.

The report also charts a continued decline in the euro’s share of the foreign exchange reserves held by central banks, which slipped 0.9 percentage points to 24.4pc over the course of 2013.

Benoît Coeuré, a member of the ECB’s executive board, said in Frankfurt yesterday morning that this was due both to ‘the continuing effects of the sovereign debt crisis’ and to ‘a longer-term structural shift away from traditional reserves currencies [such as the dollar and the euro] . . . to emerging market currencies’.

Financial fragmentation, witnessed across the currency bloc during the crisis, had weakened the image of the euro among central bank reserve managers, he said.

Mr Coeuré cited the most recent figures from the International Monetary Fund’s Currency Composition of Official Foreign Exchange Reserves database, and a survey by the Central Banking journal, as evidence that the rot had now stopped.

Indeed, many investors believe that, with emerging markets now rebuilding reserves that were depleted during last summer’s ‘taper tantrum’, buying by reserve managers may be one reason the euro has proved so stubbornly strong this year. In the long term, however, the euro’s share of global reserves could shrink again.

The euro has fared better than the dollar in one area: trade settlement, where its share in eurozone imports and exports increased slightly. A surge in use of the renminbi for trade invoicing appears to have come largely at the expense of the dollar so far.

The popularity of euro area securities, mostly denominated in euros, will also help. But that will be of little comfort to French politicians. The ECB highlighted surging capital inflows as one of the factors that have underpinned the euro’s strength over the past year - complicating the ECB’s task in fighting disinflation and prompting agonised complaints from Paris.

Published in Dawn, Economic & Business, July 21st, 2014