New pan-European payment instruments, including solutions based on emerging technologies in the financial sector or FinTech, are a part of the European Commission’s plan to boost the euro’s standing in international markets.
EU officials told EURACTIV that it is no easy task to break the US dollar’s dominance, as Commission President Jean-Claude Juncker pledged in September during his State of the EU speech.
Plans to boost the euro’s profile at international level will be released in December, just as the single currency prepares to celebrate its 20th anniversary.
One of the options being put on the table by the EU executive is promoting the euro as an international payment currency.
In that context, the Commission is considering developing new pan-European payment instruments based on the infrastructure of the Single Euro Payments Area (SEPA).
SEPA simplifies bank transfers denominated in euro, and improves efficiency in cross-border payments.
As part of the new solutions, officials are looking at the opportunities provided by FinTech, although they did not disclose further details as the plans are still under discussion.
The Commission is looking for incentives in order to convince more market players to use the euro and countries to hold its reserves in the European currency.
Part of this charm offensive also includes the promotion of the euro as a stable currency.
But this attempt comes as Italy, the third-largest eurozone economy, is unnerving financial markets with its budgetary spat with the EU.
In order to increase the monetary union’s resilience and to increase its attractiveness for investors, sources stressed the importance of completing the capital markets union, as well as the banking union and taking steps toward a fiscal union.
Juncker referred to the geopolitical risks and the ongoing global trade dispute when he made his proposal in September.
He mentioned that 80% of EU’s energy imports are paid in dollars, despite only 2% of them come from the US.
However, the biggest gap between the dollar and the euro is registered as reserve currency, not in international transactions. The trade war could be a turning point, experts said.
“If Europe knows how to manoeuvre, the trade war could represent a great opportunity for the euro,” Alicia García-Herrero, senior fellow at the Bruegel think-tank, told this website.
According to the latest figures, Russia, China and Turkey are all reducing their acquisitions of dollars.
“We are looking at whether this is a coordinated move and if someone else is buying them,” she explained.