Finance ministers from 21 euro zone countries are convening to consider a package of measures aimed at strengthening the euro's standing in global markets and making the currency a more attractive option for international transactions and reserves. The proposals, presented by the European Commission, cover legal and market reforms, new financial instruments and steps to widen the euro's use across trade and finance.
Overview of proposed actions
The measures under consideration include both structural reforms within the European Union and initiatives to expand euro-denominated instruments internationally. The European Commission has outlined a set of options that ministers will review, with the stated objective of enhancing Europe's competitiveness and its ability to withstand economic pressure from other major powers.
- Remove internal trade barriers: The International Monetary Fund estimates that remaining internal barriers inside the 27-nation EU are equivalent to a 44% tariff on goods and a 110% tariff on services. Eliminating these obstacles is presented as a foundational step to deepen internal markets.
- Introduce a single cross-border corporate law - the 28th regime: The Commission proposes a uniform legal framework for companies operating across the EU so firms can operate under one EU-designed set of corporate rules rather than navigating 27 national regimes.
- Agree an EU-wide bank deposit guarantee scheme: A single deposit protection mechanism would ensure that savers enjoy the same protection across the union regardless of their bank's location.
- Create a capital markets union: The idea is to mobilise roughly 10 trillion euros idling in bank deposits across the 27-nation bloc so that savings can be channelled into sectors lacking capital, including green energy, digital, defence and security, aerospace, semiconductors and biotechnology.
- Transform the European Stability Mechanism: The proposal calls for converting the intergovernmental euro zone bailout fund into an EU institution that could handle joint EU debt and provide a safety net for all EU countries, not only those in the euro zone.
- Issue more joint EU debt: Expanding joint issuance would help deepen the market for EU bonds, increase liquidity of euro-denominated instruments and make the currency more attractive to large investors and central banks as a reserve asset.
- Launch a digital euro: A central bank-backed digital currency would enable Europeans to make online payments using a European payment system rather than relying on U.S. companies such as VISA and Mastercard, which currently process about two-thirds of digital transactions in Europe.
- Develop euro-denominated digital assets: The Commission encourages creating euro-denominated stablecoins and tokenised deposits; at present, more than 90% of the stablecoin market is denominated in dollars, channeling investment away from Europe.
- Promote the euro as an invoice currency: The Commission suggests pushing for the euro to be used for invoicing payments in sectors including oil, gas, electricity, transport, raw materials and defence, and to use the euro in export credit tools.
- Encourage third-country issuance of euro debt: Steps are proposed to foster issuance of euro-denominated debt by countries outside the bloc.
- Provide more euro liquidity lines: The European Central Bank could expand liquidity lines in euros to other central banks and market participants globally, particularly those that issue debt in euros or invoice trade in euros.
Context and goals
The set of proposals is framed as a coordinated attempt to increase the euro's international footprint by addressing market fragmentation inside the EU, deepening capital markets and creating euro-denominated alternatives to dollar-centric instruments and payment rails. Ministers are due to debate these options to determine which steps to prioritise.
Currency reference: ($1 = 0.8432 euros)