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International role of the euro

The international role of the euro

20 years following the launch of the single currency, the euro has become the second most important currency in the world. In 2018, the European Commission has started an initiative for a critical reflection on the international role of the euro considering the future of EU27 after Brexit as well as the approaches still to be completed behind the eurozone and Capital Markets Union (CMU).

Objective

Recent shifts in global political and economic powers have pushed the European Union (EU) to identify ways that promote a more diversified and multipolar system of several global currencies, reflecting the euro area’s economic and financial weight. This would also make the international economy more resilient to shocks.

The European Commission has outlined a broad and comprehensive set of initiatives to increase the trust and attractiveness of the euro. It includes the following aspects:

  • Completion of the Europe’s Economic and Monetary Union;
  • Banking Union and CMU measures to foster a deep European financial sector;
  • Initiatives to support EU financial markets infrastructures as well as to strengthen the EU sanctions regime;
  • Promoting the use of the euro in key strategic sectors

We at Deutsche Börse Group have warmly welcomed the vision set out in the Political Guidelines of the European Commission and notably their goal to establish the EU27 as a competitive and prospering economic area supported by financial markets built on principles of stability, transparency and fairness.

Strengthening the international role of the single currency may be done through different paths: directly, by increasing the trust and attractiveness of the currency itself; and indirectly, by supporting products and services denominated in Euro as well as the Eurozone’s financial ecosystem.

Increasing trust in euro will require the aforementioned reform of the Eurozone with regard to the Economic and Monetary Union, completing the Banking Union, as well as bringing the CMU to life. In addition, based on a “fit-for-purpose” regulatory framework, market-led solutions can make a critical key contribution by providing for a virtual symbiosis between stability and growth enhancement. Thus, boosting the use of the euro in key strategic sectors, such as for example commodity markets, and making progress in securing systemically important euro-denominated markets will  contribute significantly to making the EU more resilient to shocks and ensuring its competitiveness.

In the context of the Covid-19 pandemic, the initiative of strengthening the role of the euro plays also a major role for a sustainable recovery and financing of the European economy. For example, the recovery fund and the Recovery Resilience Facility which entered into force in February 2021 will increase the supply of safe assets denominated in euro and help strengthen the resilience and the sovereignty of the Eurozone and ultimately the international role of the joint currency.

Timeline

On 5 December 2018 the European Commission published its communication “Towards a stronger international role of the euro”. It outlines the work streams mentioned above to increase the trust, usage and attractiveness of the euro at international level, which has been welcomed by the Finance Ministers of the eurozone in January 2019.

Along the different work streams, the European Commission had launched a series of open public consultations between January and April 2019 in order to gather feedback from a variety of sectors and actors to better understand the mechanisms which underpin the use of the single currency. The results of the feedback received were published in June 2019 highlighting the need for coordinated action, including considerations for next steps in specific sectors.

The initiative on the international role of the euro provides an important impetus for the overall planning of the Commission and the regulatory priorities for the current legislative period – progressing in a post-Brexit world and completing the Eurozone reforms as well as the CMU and strengthening the EU’s sovereignty and autonomy.

In the European Commission's January 2021 Communication on the EU Economic and Financial System, the Commission reaffirmed its strategic goal of strengthening the EU as a competitive and prosperous economy by promoting the international role of the euro, strengthening the European Union's financial market infrastructures and improving the implementation and enforcement of the EU sanctions regime.

European Commission: communication to strengthen the European economic and financial system

Strengthening the international role of the euro by supporting the development of emerging energy markets, such as hydrogen, and increasing the resilience of EU FMIs are important components of the Commission to build its open strategic autonomy.

Deutsche Börse Group policy paper on strengthening the role of the euro through market-led solutions

Deutsche Börse Group has warmly welcomed the Commission’s initiative on the international role of the euro. Market-led solutions for boosting key strategic sectors can contribute significantly to make the EU more resilient to shocks and more attractive for investments. Read more about the Eurozone reforms and key euro-markets here.

Theodor Weimer supports the Markets4Europe roadmap

Theodor Weimer

The Markets4Europe campaign wants to improve the financing of economic growth and employment in the EU by putting markets to work for Europe. To strengthen the international role of the euro, we need to ensure that Europe’s capital markets are anchored within our own jurisdiction.

European Commission publishes the consultation results

Based on the market consultations, the Commission informs about the initiative to develop the international use of the euro and elaborates on the need for coordinated action, including sector-specific considerations.

EEX: response to the Commission’s consultation on the role of the euro

EEX supports the Commission’s initiative, especially when it comes to the energy sector. A perfect example is the European Emission Trading Scheme. It is the world’s largest and most liquid carbon market, and denominated in euro, offering great potential to promote the international role of the euro.

European Commission consults on the international role of the euro

The European Commission launched a series of consultations to identify potential obstacles and incentives for strengthening the role of the euro in specific financial market sectors.

Deutsche Börse Group on the international role of the euro – a sound basis to take next steps

20 years ago, the euro was introduced and has since become the second most important currency in the global monetary and financial system. Please read our policy paper to find out why the euro’s good reputation is a sound basis to take next steps towards a more strongly integrated EMU, Banking Union and CMU.