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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Greetings. China’s President Xi Jinping has called for the renminbi to attain global reserve currency status. It is a reminder, if one were needed, that the race for dominating the global monetary and payments system is on. It should serve too — and this is very much needed — as a spur for Europe to speed up and get serious about its efforts to stay in the race. That’s the topic for today’s newsletter.

Xi’s statement of intent on the renminbi raises a contrast worth observing between China and the EU. Take the similarities first. Both have for some time been saying they want their currency to gain greater use internationally. Neither is happy about their dependence on the US dollar in many of their transactions with third countries. But so far neither jurisdiction has been willing to take some of the fundamental steps needed to turn their currencies into global monetary anchors — full convertibility, in the renminbi’s case, or, in the euro’s, third-country swap lines and a large supply of joint public bonds.

The nod from China’s leader, therefore, matters a lot. If Xi really wants the renminbi to become a currency with global use, let alone rival the dollar, China’s policies will change. In contrast, when the finance ministers of the six biggest EU countries say they want greater internationalisation of the euro — as they did just recently — the sensible response is “I’ll believe it when I see it”.

That is because, unlike China, the EU so far shows little real interest in becoming a global power. Where Beijing is willing to look for and then pursue policies that would draw other countries into its economic orbit, European capitals are either incapable of formulating strategic goals at a global power’s level of ambition, or unwilling to contemplate the sorts of policies that such goals would require.

In the absence of that, it is normal that the international use of the euro should remain stagnant at a distant number 2 after the greenback. And if China is getting serious about the renminbi — and Xi’s encouragement means convertibility will improve, for example — the euro should expect even its second place to be encroached on.

For that to change, the countries and institutions of the euro must find the will to adopt measures with the deliberate purpose of making the currency something others want to use. To be blunt: an offer they can’t (or at least are unlikely to) refuse. Hence, my mention of swap lines and common bonds.

Swap lines are how central banks act as lenders of last resort to financial systems beyond their own jurisdictions: they lend their own currency to other central banks so that those central banks can, in turn, provide liquidity in (what from their point of view is) foreign currency to private financial institutions in their own country. This is essential because no central bank worth their salt would let their banking system rack up such large liabilities in foreign currencies that they would be unsalvageable in a crisis. (A central bank can bring into existence any amount of liquidity it wants in the domestic currency, but nobody can print another country’s money.)

The European Central Bank has a network of swap lines, but only with the central banks issuing the world’s major currencies. It also maintains a set of bilateral repo lines, which serve a similar function, but only with non-euro EU members and some small European states. But neither is relevant to the smaller non-European economies that a more internationalised euro would be competing for market share in.

If European leaders are serious about the euro’s role, then, they must embrace euro swap lines from the ECB that would make more small and midsize non-European countries feel safe about tying in their banking, payment and financial systems closer with the euro. A decision to commit to monetarily standing by third countries in a crisis, and possibly taking on some risk in the process of doing so, is, of course, a deeply political one. The ECB can be forgiven for not pursuing this of its own accord; it would need clear political backing to do so. (But the ECB could, of course, ask for such backing as something necessary to internationalise the euro — a task for which it does have political backing.)

The other big change leaders would have to embrace is to let financial markets lend more money to the EU. If that sounds like a funny way of putting it, it’s because the usual way — to let the EU borrow more from financial markets — is so caught up in toxic political paralysis that it makes it harder to have reasonable debates. Since the start of the euro, the main perspective on common borrowing has been that it makes fiscally strong countries foot the bill for weaker ones (“Eurobonds” is a slur in some countries).

But in the context of boosting the euro’s international attractiveness, what matters is not a government’s ability to deficit-finance its spending but investors’ ability to access a public authority’s balance sheet at scale. While the public sector must create liabilities (ie borrow) for investors to hold such assets, the liability needn’t fund any spending at all. It could, for example, all go into a sovereign wealth facility investing in private funds that finance promising European start-ups to scale up without having to move to the US for lack of funding. (As I proposed here.)

What has held the EU back from doing these things in the past is that they entail risk, and shared risk at that. But if there is anything the current geopolitical moment should imprint on leaders, it is that the risk has come in any case. And that, in Europe’s case at least, a risk shared will increasingly be a risk reduced.

Other readables

● How the Federal Reserve might change under Kevin Warsh.

● Spain follows Australia in banning social media for under-16-year-olds.

● The Roosevelt Institute analyses how to tax wealth.

● Should we worry about wobbles in the US Treasuries market?

● Has Dr Strangelove popped up in Sweden?

● Russia is waging a hybrid war in space.