On Monday 16 February, the finance ministers of the euro area countries agreed on the need to strengthen the international role of the euro and to promote European monetary sovereignty.
“There was broad agreement that the international role of the euro is largely a function of progress of many of the other priorities within which we have already identified to strengthen the EU economy”, said Eurogroup President Kyriakos Pierrakakis after the meeting, while also noting the work undertaken on the Savings and Investment Union, the competitiveness agenda and digital finance.
“To strengthen the euro’s international role, we first need a strong economy”, emphasised Dutch Finance Minister Eelco Heinen on Monday. Also adding that: “We need solid public finances and, of course, bilateral trade agreements”.
Although the dollar remains the dominant currency, the euro is emerging as the world’s second most important reserve currency, accounting for almost 20% of central bank foreign exchange reserves, according to the International Monetary Fund (IMF). Greater use of the single currency throughout the world also means greater exposure to shocks. “We support a stronger role for the euro, but we want to look more closely at its costs and benefits”, said a source at the French Ministry of the Economy.
During the ministers’ meeting, the European Commissioner for Economy, Valdis Dombrovskis, presented the ministers with a note from the European Commission that was designed to guide the Eurogroup’s future work on strengthening the international role of the euro.
The document proposes a strategic approach based on three priorities: consolidating the EU’s competitiveness and institutional framework; deepening the integration of financial markets and payment systems, notably through the digital euro; strengthening the EU’s external dimension in order to increase the use of the euro in trade, investment and global finance.
In this context, the Commissioner also stressed the importance of developing safe European assets to support the internationalisation of the single currency. “On the question of continued issuance of safe assets, (…) we foresee the possibility to use joint borrowing to address crises. Over the next Multiannual Financial Framework, we will see this as a more structural possibility”, said Mr Dombrovskis.
See the note from the European Commission: https://aeur.eu/f/kr7 (Original version in French by Bernard Denuit)