Strengthening the global role of the Euro

European Strategic Autonomy series - Economy & Trade

Policy Brief


The talk about EU strategic autonomy has brought to light the role of Euro in advancing EU strategic interests. The shift from an economic view of the single currency towards seeing it as a strategic tool started several years ago, most notably in 2018 under Commission President Juncker. In the wake of the recent crises – the pandemic, the war, and now also inflation and monetary tightening – the issue has taken on a new urgency, as we are observing the politicisation of international economic relations as never before.

In this policy brief, Dr George Papaconstantinou explores motivations for strengthening the global role of the euro and suggests economic policies towards that end. 

The euro maintains a consistent and strong second place, after US dollar, but with a substantial variance in different fields. The policy brief reviews the main limiting factors for the wider use of the euro.  Apart from the built-in dollar bias of the Bretton Woods system, these include EU´s financial fragmentation (lack of liquidity and depth of financial markets), uncertain governance of the eurozone, still limited ability or willingness of the ECB to act internationally, to name the major ones. 

The policy brief suggests that strengthening the international role of the euro involves policy action on three fronts: 

  • Filling in the missing elements of the economic and monetary union: completing the banking union, creating a capital markets union, strengthening fiscal capacity for macroeconomic stabilisation, and creating a euro area safe asset.
  • Improving financial market infrastructure, in particular, by extending the use of swap lines to facilitate liquidity in euro.
  • Expanding the use of the euro in key strategic sectors: energy, commodities, and transport.

A dedicated and focused effort in these domains will make sure that the euro can support the broader European economic and security goals.

Fondation Jean-Jaurès
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