Merz Warns Weak Dollar Burdens Exports, Calls for Digital Euro

• Strong euro compared to the dollar makes German goods pricier for global buyers.
• Smaller companies that can’t easily protect themselves from currency swings have it worse.
• The European Central Bank is reportedly targeting the launch of the digital euro by 2029.

German Chancellor Friedrich Merz has publicly said he is worried about the US dollar staying weak against the euro, with the exchange rate sometimes going above $1.20.

According to him, this is putting a heavy extra burden on Germany’s economy, which relies on exports, and is particularly hard for smaller companies that can’t easily protect themselves from currency swings.

When the euro is strong compared to the dollar, it makes products made in Germany more expensive for foreign buyers. This hurts their ability to compete on price against goods from the US and elsewhere, adding to the challenges already caused by trade tensions and Chinese competition.

The falling value of the US dollar is a big topic in Europe, influencing talks at the European Central Bank about future policy moves, like changing interest rates to help the economy as inflation slows down. 

The Call for a Digital Euro

Reacting to the currency situation, Chancellor Merz and Finance Minister Lars Klingbeil have stated their strong support for fast-tracking the creation of a digital euro. They argue that a digital euro could help make the currency stronger worldwide, reduce Europe’s need for the US dollar, and give the region more control over its money in the future.

Their statements occur as political discussions within the EU intensify regarding Central Bank Digital Currencies (CBDCs) and the digital euro’s place in Europe’s financial framework. 

The discussion involves critics and industry voices, who are arguing over how it should be designed, privacy protections, its effect on the banking system, and how soon it could launch, with the European Central Bank reportedly targeting a launch by 2029.

Merz called the digital euro a key part of Europe’s plan to stay competitive globally and be less affected by swings in other countries’ currencies. His view matches recent efforts by the European Central Bank to encourage more use of the euro worldwide.

Despite ongoing concerns, Europe’s economy has shown modest growth in late 2025, although the stronger euro is still making exports more difficult. Exports are very important for growth in Germany and the EU. Experts say that if the euro keeps getting stronger, the European Central Bank might feel pressure to change its policies to help the economy and keep inflation on track.

Related: 68 Economists Warn EU Will Lose Control of Money Without Digital Euro