Frankfurt am Main (AFP) - Fear of trade conflicts, sanctions and challenges to the multilateral order contributed to a rebound in worldwide use of the euro in 2018 from historic lows, the European Central Bank said Thursday.

“It’s primarily the diversification out of the dollar which benefits the euro, because it is the second-most used currency and second-most liquid for investors,” ECB board member Benoit Coeure told reporters in Frankfurt.

Aside from commercial tensions, internal reforms within the eurozone to deepen the economic and monetary union between the members also helped, the ECB found in its annual report on the euro’s global role.

Euros made up some 20.7 percent of global foreign currency reserves in 2018, measured at constant exchange rates – up 1.2 percentage points year-on-year.

Meanwhile, the dollar remained top dog, but fell to its lowest share since the euro’s launch 20 years ago, at 61.7 percent.

“Some central banks might have started to consider reducing their positions in financial assets exposed to the risks of unilateral actions,” the ECB said.

Russia – one of the world’s biggest holders of reserves – sold $100 billion in 2018 after a new round of American sanctions, instead buying up $90 billion worth of euros and Chinese yuan.

The central bank also found that the proportion of new euro-denominated debt from non-eurozone issuers grew 2.5 percentage points last year, to 22.7 percent, while the dollar’s share shrank by eight points to below 61 percent.

And the proportion of international payments for goods and services in euros held steady.

Looking ahead, “the international role of the euro should be decided by market forces,” Coeure said, although the ECB is able to support it “in the technical field”.

“For instance by supporting the integration of European payments, that can make it easier, faster and cheaper for international investors to use euro denominated assets.”

Meanwhile, strengthening the economic and monetary union between euro member countries should also provide the foundation for use of the currency to grow internationally.

The European Commission prodded member states Wednesday to complete reforms to the single currency bloc, including an embryonic joint budget for the 19 member states – on the agenda at a “Eurogroup” finance ministers’ meeting Thursday.