Making euro true global currency

The Commission urges it to be used in international energy agreements and transactions

Photo: EPA The euro initiatives were presented by VP Valdis Dombrovskis, Climate Action Commissioner Miguel Arias Canete and Finance Commissioner Pierre Moscovici (L-R).

In light of the upcoming European Council and Euro Summit in December, the Commission presented last Wednesday actions to strengthen the role of the euro in a changing world, the EU press service reported. Supported by upcoming decisions to strengthen Economic and Monetary Union, complete the Banking Union and advance on the Capital Markets Union, the euro needs to develop its global role and fully reflect the euro area's political, economic and financial weight.

“The euro is a young but successful currency. The time has come for the euro to develop further its global role. The euro should reflect the euro area's political, economic and financial weight and support a balanced, rules-based international political and economic order. Today's proposals are there to start a journey, which can only succeed if there is a joint effort from the EU, Member States, market participants and other actors,” VP Valdis Dombrovskis stated.

Promoting the euro's international role is part of Europe's commitment to an open, multilateral and rules-based global economy and trade. This comes at a time where the recent global trends, the emergence of new economic powers along with the development of new technologies are supporting a potential shift towards a more diversified and multipolar system of several global currencies.

Initiatives to boost the role of the euro include completing first of all Europe's Economic and Monetary Union, Banking Union and Capital Markets Union. Only seven of the Commission's 40 key proposals to the co-legislators in these areas have been adopted so far. Additional measures to foster a deep European financial sector, including stronger European financial market infrastructures; solid interest rate benchmarks and an integrated instant payment system in the EU are still to be considered. Furthermore, initiatives linked to the international financial sector: ongoing cooperation between central banks to safeguard financial stability; increasing the share of euro denominated debt issued by European entities; fostering economic diplomacy to promote the use of the euro and providing technical assistance to improve access to the euro payment system by foreign entities are to be made.

The Commission also called on Member States to promote the wider use of the euro in strategic sectors. In spite of their position as large buyers as well as major producers, European businesses still trade in US dollar in key strategic markets, often even between themselves. This exposes businesses to currency risks and political risks, such as unilateral decisions that directly affect dollar denominated transactions. In this context, the Commission proposed euro to be widely used in international energy agreements and transactions. This will allow European businesses to benefit from stronger autonomy and finance themselves with reduced exposure to legal actions taken by third country jurisdictions. This will support the EU's objective to build an Energy Union that ensures safe, viable and accessible energy supply.

The Commission will launch a series of targeted consultations with stakeholdersand report on the results in the summer of 2019. It will start a consultation on the market potential for a broader use of euro-denominated transactions in oil, refined products and gas. On raw materials (metals and minerals) and agri-food commodities, the Commission will consult with stakeholders to identify ways of increasing euro-denominated trade. A consultation will also be launched to investigate possible actions to promote the use of the euro in the transport-manufacturing sector.

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