Brussels: The euro has the potential to replace the US dollar as the global reserve currency, but 'the lack of unity within the eurozone' and the depth of the American capital markets remain major obstacles toward that goal, experts told Anadolu. According to Anadolu Agency, European Central Bank (ECB) President Christine Lagarde recently stated that the euro has the potential to be an alternative to the dollar, as it can play a bigger role in a world increasingly influenced by trade protectionism. Jane Foley, head of FX strategy at Rabobank, noted that Lagarde's statement aligns with German Chancellor Friedrich Merz's post-election call for greater independence from the US. Foley emphasized that while the lack of fiscal unity within the eurozone and the comprehensive nature of US capital markets pose significant challenges, this does not preclude the euro and other currencies like the Chinese yuan from gradually diminishing the dollar's dominance. Foley added, "Lagarde's remarks that the Eurozone will pus h to have more trade invoiced in euros going forward is an important step in loosening dependency on the greenback." Kyle Chapman, an FX markets analyst at the Ballinger Group, acknowledged the euro's potential to become an alternative to the dollar but underscored the need for changes. He explained that the dollar remains preferred due to the US's cohesive nature and its singular, deeply liquid debt market, in contrast to the eurozone, which is fragmented and consists of numerous issuers with varying creditworthiness. Chapman pointed out, "The German Bund market is too small to rival Treasuries, and other European countries are not as safe." He suggested that for the euro to become a true alternative to the dollar, it would require more joint borrowing, EU-level debt issuance, integrated capital markets, and increased euro-denominated invoicing.