MEPs agreed that the euro must reach its global potential to boost the EU’s influence, financial autonomy and attract more companies and investors.
The text was adopted on Thursday with 494 votes to 94 and 100 abstentions. MEPs highlighted that the euro’s global potential has not been fully reached, and its benefits are shared unevenly among the Eurozone members. Despite the euro area’s economic size, its use lags behind that of the US dollar by a wide margin.
Danuta HÜBNER (EPP, PL), the lead MEP, said: In its 20 years of existence, the euro has become a positive symbol of Europe’s unity, integration and economic strength, yet the euro’s global potential has not been fully reached. It is in the long-term strategic interest of the euro area and its Member States to reap all possible benefits from the issuance of the euro currency, and in particular from its enhanced international role.
As the decision to use a currency is ultimately determined by market participants’ preferences, our aim is to design and implement policy measures that are supporting market driven shifts in this direction. To support these policies, the Union needs to complete the infrastructure for the common currency and make further progress on its critical functions.
Global currency benefits
MEPs listed the benefits that would stem from the euro having a greater international role and its increased use as a reserve currency, such as financial autonomy. They also stressed the importance of having independent EU market operators and transaction networks. An international euro would bring about stability and reliable access to finance for European businesses and governments, whilst also reducing transaction costs and vulnerability to exchange rate shocks.
Challenges of fragmented capital markets
Fragmented and heavily bank-based capital markets hamper the euro’s prospects as a global currency, MEPs stressed, calling for the Economic and Monetary Union (EMU), the Banking Union and the Capital Markets Union (CMU) to be deepened and completed. They also encouraged member states to cooperate in the taxation of financial products. In order to make risk-free assets denominated in euro more widely available, the European Investment Bank (EIB) could issue a larger number of euro-denominated bonds.
Green finance and digital euro
MEPs highlighted that in 2019 over half of the green bonds issued globally were in euro. The EU should become a world leader in setting standards for issuing green bonds and a global euro is central to achieving the EU’s climate objectives..
MEPs welcomed the European Central Bank report on the digital euro but underlined that the digital euro would complement cash, not replace it. A stronger role for the euro in the digital age must be underpinned by innovative digital finance solutions, effective digital payments in euro and the highest standards for cybersecurity and consumer protection. MEPs took note of the emergence of crypto-assets and stressed the importance of monitoring their development and the risks of stablecoins for monetary sovereignty.
Finally, MEPs stressed the requirement, laid down in the Treaties, for every member state, except for Denmark, to adopt the single currency once they have met the Maastricht convergence criteria. The single currency is irreversible, they said, and the euro is not only a monetary project but also a political one.