On Wednesday 5 December, the European Commission presented two documents - a general communication and a Recommendation on energy - with a view to strengthening the role of the euro on the international stage.
"Strengthening the euro would increase Europe's ability to shape major world events [...] It would also allow the EU to assume greater global responsibilities.” It is partly with these words that Pierre Moscovici, Commissioner for Economic and Financial Affairs, explained the two documents published by the European Commission on strengthening the international role of the euro, which will be presented to the heads of state or government of EU member states at the Euro Summit on 14 December.
The Commission’s initiative comes as no surprise, as it was announced by its President, Jean-Claude Juncker, in his State of the Union Address on 12 September (see EUROPE 12094).
Almost twenty years after the introduction of the single currency, the Commission wants to make the euro more attractive. It is impossible, however, to force global economic actors to make wider use of the euro, as this is entirely their decision. But assuring these actors that the single currency is stable and solid could encourage them to use it, without trying to dethrone the US dollar.
In addition, the Commission sees the strengthening of the euro as an opportunity to improve the resilience of the international financial system, as the euro has been one of the most stable currencies in recent years. Internally, it also believes that such a process would enhance the protection of European businesses and citizens, particularly regarding external risks.
Deepening EMU. In the general communication, the Commission first points to the need to move forward with reforms on Economic and Monetary Union (EMU). “The first thing is to do our homework and to complete the architecture of EMU", said Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue.
The work on this subject and on the Banking Union and the Capital Markets Union is essential for the institution, in order to strengthen the current financial and economic framework. The Commission is therefore waiting for its proposals in this area to be implemented.
The publication date of this document is relevant, as EU leaders are expected to discuss the deepening of EMU and the completion of the Banking Union at the Euro Summit on 14 December, based on the work of the Eurogroup (see EUROPE 12152).
The Commission also wants to strengthen the infrastructure of European financial markets, and to ensure that more euro-denominated debt securities are issued in the EU.
Recommendation on energy. The Commission also presented a communication on the wider use of the euro in international energy markets.
First, it notes that the EU's annual energy bill has, for several years, reached €300 billion. However, 85% of long-term contracts are paid in dollars, as Miguel Arias Cañete, Commissioner for Climate Action and Energy, has pointed out.
For the Commission, wider use of the euro would allow European businesses to benefit from stronger autonomy and reduced exposure to legal actions taken by third country jurisdictions.
The Commission also states that it is preparing to hold consultations in various areas (energy, raw materials, transport) and that it will present its results in the summer of 2019. (Original version in French by Lucas Tripoteau)