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Brussels, |
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Euro in the World
The euro, the currency of 20 EU countries and over 350 million citizens, is the second most important currency in the world. To further develop its global role, the European Commission has launched a new strategy aimed at enhancing the openness, strength, and resilience of the EU's economic and financial system. This initiative, announced on January 19, 2021, includes a series of targeted actions to promote the international role of the euro, reflecting the euro area's economic and financial weight and making the global economy less vulnerable to shocks.
Strategic Goals
The strategy underscores the importance of strengthening the euro’s international role to bolster the EU’s influence in global affairs, protect its economic interests, and promote a rule-based multilateralism. By increasing the euro’s global use, the EU aims to enhance the resilience of the international financial system, offering more choices to market operators worldwide and reducing reliance on a single currency, such as the US dollar.
Euro and Economic Recovery
The issuance of euro-denominated bonds under the NextGenerationEU recovery plan will deepen EU capital markets and make them more attractive to investors. Additionally, promoting sustainable finance can position the EU as a global hub for green finance, further solidifying the euro's role in international markets. The EU is also exploring the concept of a digital euro, which could further support the euro’s international role.
Public Support for the Euro
Public support for the euro remains strong, with surveys indicating record-high approval levels. The latest survey from March 2021 shows that 80% of respondents in the euro area view the euro as a positive asset for the EU, highlighting its importance in the everyday lives of Europeans.
Deepening the Economic and Monetary Union
The success of the euro on the global stage depends on a robust institutional framework within the EU. This includes deepening the Economic and Monetary Union (EMU), completing the Banking Union, and developing deep and liquid capital markets through the Capital Markets Union (CMU). These initiatives are essential to reinforcing the euro’s international role.
The Current International Role of the Euro
The euro already plays a significant role in the global economy:
Benefits of an Enhanced International Role for the Euro
Expanding the global use of the euro can yield several benefits for the EU:
Strengthening the European Financial Sector
To foster the euro's global role, the EU is focused on creating a deep and autonomous European financial sector. This includes:
International Financial Sector Initiatives
The EU is engaging more actively with international actors to promote the euro. Initiatives include:
Euro in Energy and Commodity Markets
The euro’s role in global commodity markets is growing. Since the adoption of the Commission’s recommendation on the international role of the euro, the use of the euro in EU gas markets has significantly increased. The Commission continues to work with key sectors to further promote the use of the euro in global trade, including in emerging markets like hydrogen.
For more information, you can explore the European Commission’s strategy on enhancing the international role of the euro.
Strategic Goals
The strategy underscores the importance of strengthening the euro’s international role to bolster the EU’s influence in global affairs, protect its economic interests, and promote a rule-based multilateralism. By increasing the euro’s global use, the EU aims to enhance the resilience of the international financial system, offering more choices to market operators worldwide and reducing reliance on a single currency, such as the US dollar.
Euro and Economic Recovery
The issuance of euro-denominated bonds under the NextGenerationEU recovery plan will deepen EU capital markets and make them more attractive to investors. Additionally, promoting sustainable finance can position the EU as a global hub for green finance, further solidifying the euro's role in international markets. The EU is also exploring the concept of a digital euro, which could further support the euro’s international role.
Public Support for the Euro
Public support for the euro remains strong, with surveys indicating record-high approval levels. The latest survey from March 2021 shows that 80% of respondents in the euro area view the euro as a positive asset for the EU, highlighting its importance in the everyday lives of Europeans.
Deepening the Economic and Monetary Union
The success of the euro on the global stage depends on a robust institutional framework within the EU. This includes deepening the Economic and Monetary Union (EMU), completing the Banking Union, and developing deep and liquid capital markets through the Capital Markets Union (CMU). These initiatives are essential to reinforcing the euro’s international role.
The Current International Role of the Euro
The euro already plays a significant role in the global economy:
- The euro accounts for about 15% of global GDP, with around 36.7% of global payments made in euros.
- The euro is the second most widely used currency in the international monetary system, following the US dollar.
- Over 60 countries and territories, representing around 175 million people, use the euro or peg their currency to it.
Benefits of an Enhanced International Role for the Euro
Expanding the global use of the euro can yield several benefits for the EU:
- Lower Costs for European Businesses: Trading in euros reduces exchange rate risks and currency-related costs, especially for small and medium-sized enterprises (SMEs).
- Additional Market Choices: Global market operators will have more options, promoting financial stability.
- Lower Interest Rates: A more attractive euro reduces borrowing costs for European households, businesses, and governments.
- Reliable Access to Finance: European businesses and governments can access finance more reliably, even during global financial instability.
- Increased Autonomy: European consumers and businesses will face reduced exposure to extraterritorial legal actions, such as sanctions.
Strengthening the European Financial Sector
To foster the euro's global role, the EU is focused on creating a deep and autonomous European financial sector. This includes:
- Strengthening Market Infrastructure: Enhancing the liquidity and resilience of European financial markets.
- Reliable Interest Rate Benchmarks: Ensuring trustworthy benchmarks for the euro.
- Integrated Payment Systems: Supporting a fully integrated instant payment system within the EU.
International Financial Sector Initiatives
The EU is engaging more actively with international actors to promote the euro. Initiatives include:
- Central Banks Collaboration: Supporting global financial stability through central bank cooperation.
- Euro-Denominated Debt: Increasing the share of euro-denominated debt issued by European entities.
- Economic Diplomacy: Promoting the euro in international payments and as a reserve currency.
- Technical Assistance: Helping developing countries access the euro payment system.
Euro in Energy and Commodity Markets
The euro’s role in global commodity markets is growing. Since the adoption of the Commission’s recommendation on the international role of the euro, the use of the euro in EU gas markets has significantly increased. The Commission continues to work with key sectors to further promote the use of the euro in global trade, including in emerging markets like hydrogen.
For more information, you can explore the European Commission’s strategy on enhancing the international role of the euro.
