Euro zone finance ministers are set to discuss strategies to elevate the euro’s global standing and bolster Europe’s economic security at a meeting on February 16. The discussion will include exploring the issuance of euro-denominated stablecoins and increasing joint EU debt, according to a European Commission paper prepared for the ministers. This initiative arrives amid global economic uncertainties, trade tensions, and questions surrounding the U.S. dollar’s dominance as a safe-haven currency. The European Commission functions as the executive arm of the European Union.
The Commission’s paper argues that a stronger euro would enhance global financial stability, improve EU trade and financial relations, and bolster the EU’s capacity to uphold its values and enforce sanctions effectively. Currently, the euro, used by 21 of the 27 EU member countries, holds approximately 20% of global currency reserves, second to the U.S. dollar’s 60%. Proposed measures include exploring euro-denominated digital assets and addressing risks associated with foreign currency-backed stablecoins, as euro-denominated instruments comprise less than 1% of the stablecoin market, currently dominated by U.S. dollar assets.
Further strategies involve deepening the euro-denominated debt market through joint EU issuance for common projects and encouraging non-euro zone entities to issue debt in euros. The Commission also suggests that the European Central Bank (ECB) offer more bilateral liquidity arrangements to third countries. Complementing these efforts, ECB President Christine Lagarde has indicated that the central bank will present EU leaders with a checklist of reforms aimed at enhancing Europe’s growth and competitiveness.
Additional proposals include denominating European development aid and loans to third countries in euros and encouraging European companies to invoice trade in euros for commodities like oil, gas, and raw materials. The paper also advocates for creating a European payments system to reduce reliance on Visa and Mastercard. To attract investment, the Commission calls for removing trade barriers within the EU, harmonising legal, tax, and labour laws, and facilitating the free flow of capital across the EU by harmonising investment, trading, tax, and supervision rules.
