European Union finance ministers will meet to consider a set of proposals intended to expand the euro's role in international commerce and finance. The package, put forward by the European Commission, includes measures aimed at reducing internal frictions in the EU, deepening financial markets, and creating new payment and debt instruments denominated in euros.
The measures under discussion comprise 11 distinct actions:
- Remove internal trade barriers within the 27-member EU. The International Monetary Fund has estimated that these barriers are equivalent to a 44% tariff on goods and a 110% tariff on services.
- Introduce a single law for companies operating across the EU - referred to as the 28th regime - so businesses operating in multiple member states would follow one EU-designed corporate law instead of 27 separate national company law frameworks.
- Agree an EU-wide bank deposit guarantee scheme to ensure savers across the union receive the same level of protection regardless of which bank holds their deposits.
- Create a Capital Markets Union to channel an estimated 10 trillion euros idle in bank deposits across the 27-nation bloc into sectors that lack capital, including green energy, digital, defence and security, aerospace, semiconductors and biotechnology.
- Transform the intergovernmental euro zone bailout fund - the European Stability Mechanism - into an EU institution that would manage EU joint debt and provide a safety net for all member states, not only those within the euro zone.
- Issue more joint EU debt to develop a deeper, more liquid market for EU bonds and to make euro-denominated securities more appealing to large investors and central banks as reserve assets.
- Launch a digital euro that would enable Europeans to complete online payments using a European payments system, reducing dependence on U.S.-based card networks such as VISA and Mastercard, which currently handle about two thirds of card transactions in the euro zone.
- Develop euro-denominated digital assets including stablecoins and tokenised deposits. At present, more than 90% of the stablecoin market is denominated in dollars, which draws investment toward the United States and helps finance U.S. debt rather than European debt.
- Encourage use of the euro as the invoice currency for payments in oil, gas, electricity, transport, raw materials and defence, and deploy the euro in export credit tools.
- Encourage issuance of euro-denominated debt by third countries to broaden the market for euro instruments outside the EU.
- Expand euro liquidity lines from the European Central Bank to other central banks and market participants around the world, particularly those that issue debt in euros or invoice trade in euros.
Ministers will discuss whether to pursue these proposals as a way to strengthen the international presence of the euro and to make the EU more competitive and resilient in the face of economic pressure from other major economies.
Exchange rate reference: ($1 = 0.8432 euros)