Commission takes further steps to foster the openness, strength and resilience of Europe's economic and financial system

The European Commission today pre­sent­ed a new strat­e­gy to stim­u­late the open­ness, strength and resilience of the EU’s eco­nom­ic and finan­cial sys­tem for the years to come. 

This strat­e­gy aims to bet­ter enable Europe to play a lead­ing role in glob­al eco­nom­ic gov­er­nance, while pro­tect­ing the EU from unfair and abu­sive prac­tices. This goes hand in hand with the EU’s com­mit­ment to a more resilient and open glob­al econ­o­my, well-func­tion­ing inter­na­tion­al finan­cial mar­kets and the rules-based mul­ti­lat­er­al sys­tem. This strat­e­gy is in line with President von der Leyen’s ambi­tion for a geopo­lit­i­cal Commission and fol­lows the Commission’s May 2020 Communication “Europe’s moment: Repair and Prepare for the Next Generation”.

This pro­posed approach is based on three mutu­al­ly rein­forc­ing pillars:

  1. Promoting a stronger inter­na­tion­al role of the euro by reach­ing out to third-coun­try part­ners to pro­mote its use, sup­port­ing the devel­op­ment of euro‑denominated instru­ments and bench­marks and fos­ter­ing its sta­tus as an inter­na­tion­al ref­er­ence cur­ren­cy in the ener­gy and com­modi­ties sec­tors, includ­ing for nascent ener­gy car­ri­ers such as hydro­gen. The issuance of high-qual­i­ty euro-denom­i­nat­ed bonds under NextGenerationEU will add sig­nif­i­cant depth and liq­uid­i­ty to the EU’s cap­i­tal mar­kets over the com­ing years and will make them, and the euro, more attrac­tive for investors. Promoting sus­tain­able finance is also an oppor­tu­ni­ty to devel­op EU finan­cial mar­kets into a glob­al ‘green finance’ hub, bol­ster­ing the euro as the default cur­ren­cy for sus­tain­able finan­cial prod­ucts. In this con­text, the Commission will work to pro­mote the use of green bonds as tools for the financ­ing of ener­gy invest­ments nec­es­sary to reach the 2030 ener­gy and cli­mate tar­gets. The Commission will issue 30% of the total bonds under NextGenerationEU in the form of green bonds. The Commission will also look for pos­si­bil­i­ties to expand the role of the EU Emission Trading System (ETS) to max­imise its envi­ron­men­tal out­come and to sup­port ETS trad­ing activ­i­ty in the EU. In addi­tion to all this, the Commission will also con­tin­ue sup­port­ing the work of the European Central Bank (ECB) on a pos­si­ble intro­duc­tion of a dig­i­tal euro, as a com­ple­ment to cash.
  2. Further devel­op­ing EU finan­cial mar­ket infra­struc­tures and improv­ing their resilience, includ­ing towards the extrater­ri­to­r­i­al appli­ca­tion of sanc­tions by third coun­tries. The Commission, in coop­er­a­tion with the ECB and the European Supervisory Authorities (ESAs), will engage with finan­cial-mar­ket infra­struc­ture com­pa­nies to car­ry out a thor­ough analy­sis of their vul­ner­a­bil­i­ties as regards the unlaw­ful extrater­ri­to­r­i­al appli­ca­tion of uni­lat­er­al mea­sures by third coun­tries and take action to address such vul­ner­a­bil­i­ties. The Commission will also estab­lish a work­ing group to assess pos­si­ble tech­ni­cal issues relat­ed to the trans­fer of finan­cial con­tracts denom­i­nat­ed in euro or oth­er EU cur­ren­cies cleared out­side the EU to cen­tral coun­ter­par­ties locat­ed in the EU. In addi­tion to this, the Commission will explore ways to ensure the unin­ter­rupt­ed flow of essen­tial finan­cial ser­vices, includ­ing pay­ments, with EU enti­ties or per­sons tar­get­ed by the extra-ter­ri­to­r­i­al appli­ca­tion of third-coun­try uni­lat­er­al sanctions.
  3. Further pro­mot­ing the uni­form imple­men­ta­tion and enforce­ment of the EU’s own sanc­tions. This year, the Commission will devel­op a data­base – the Sanctions Information Exchange Repository – to ensure effec­tive report­ing and exchange of infor­ma­tion between Member States and the Commission on the imple­men­ta­tion and enforce­ment of sanc­tions. The Commission will work with Member States to estab­lish a sin­gle con­tact point for enforce­ment and imple­men­ta­tion issues with cross-bor­der dimen­sions. The Commission will also ensure that EU funds pro­vid­ed to third coun­tries and to inter­na­tion­al organ­i­sa­tions are not used in vio­la­tion of EU sanc­tions.  Given the impor­tance of mon­i­tor­ing the har­monised enforce­ment of EU sanc­tions, the Commission will set up a ded­i­cat­ed sys­tem allow­ing for the anony­mous report­ing of sanc­tions eva­sion, includ­ing whistleblowing.

Today’s strat­e­gy builds on the 2018 Communication on the International Role of the Euro, which had a strong focus on strength­en­ing and deep­en­ing the Economic and Monetary Union (EMU). A resilient eco­nom­ic and mon­e­tary union is at the heart of a sta­ble cur­ren­cy. The strat­e­gy also acknowl­edges the unprece­dent­ed recov­ery plan ‘Next Generation EU’ that the EU adopt­ed to tack­le the COVID-19 pan­dem­ic and to help Europe’s economies recov­er and embrace the green and dig­i­tal transformations.

Members of the College said:

Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People said: “The EU is a cham­pi­on of mul­ti­lat­er­al­ism and is com­mit­ted to work­ing close­ly with its part­ners. At the same time, the EU should cement its inter­na­tion­al stand­ing in eco­nom­ic and finan­cial terms. This Strategy sets out key ways to do this, notably by boost­ing glob­al use of the EU’s com­mon cur­ren­cy — the euro. It also looks at ways to rein­force the infra­struc­ture that under­pins our finan­cial sys­tem and to strive for glob­al lead­er­ship in green and dig­i­tal finance. In shap­ing a more resilient econ­o­my, the EU must also bet­ter defend itself against unfair and unlaw­ful prac­tices from else­where. When these occur, we should act deci­sive­ly and force­ful­ly, which is why the cred­i­ble enforce­ment of EU sanc­tions is so important.”

Mairead McGuinness, Commissioner respon­si­ble for finan­cial ser­vices, finan­cial sta­bil­i­ty and the Capital Markets Union, said: “The EU econ­o­my and finan­cial mar­ket must con­tin­ue to be attrac­tive to inter­na­tion­al investors. Substantial progress since the last glob­al finan­cial cri­sis has helped improve the EU’s insti­tu­tion­al and leg­isla­tive frame­work. In addi­tion, the EU’s ambi­tious recov­ery plan in response to the COVID-19 cri­sis will sup­port the econ­o­my, pro­mote inno­va­tion, widen invest­ment oppor­tu­ni­ties and increase the sup­ply of high-qual­i­ty euro-denom­i­nat­ed bonds. To con­tin­ue these efforts – and tak­ing account of new geopo­lit­i­cal chal­lenges – we are propos­ing a num­ber of addi­tion­al actions to increase the resilience of the EU econ­o­my and its finan­cial mar­ket infra­struc­tures, fos­ter the euro’s sta­tus as an inter­na­tion­al ref­er­ence cur­ren­cy, and strength­en the imple­men­ta­tion and enforce­ment of EU sanctions.”

Paolo Gentiloni, Commissioner respon­si­ble for the econ­o­my, said: “Strengthening the inter­na­tion­al role of the euro can shield our econ­o­my and finan­cial sys­tem from for­eign exchange shocks, reduce reliance on oth­er cur­ren­cies and ensure low­er trans­ac­tion, hedg­ing and financ­ing costs for EU firms. With our new long-term bud­get and NextGenerationEU, we have the tools to sup­port the recov­ery and trans­form our economies – in the process mak­ing the euro even more attrac­tive for glob­al investors.

Kadri Simson, Commissioner for Energy, said: “A strong euro is impor­tant for the ener­gy sec­tor. On the EU ener­gy mar­kets, the role of the euro has sig­nif­i­cant­ly increased in recent years. For nat­ur­al gas con­tracts, we have seen its share rise from 38% to 64%. We must ensure that this trend con­tin­ues into nascent mar­kets, for exam­ple for hydro­gen, as well as strate­gic mar­kets for renew­ables, where the EU is a glob­al leader. We also want to rein­force euro’s role in financ­ing sus­tain­able invest­ments, in par­tic­u­lar as the cur­ren­cy for green bonds.”

Background

The Commission’s Communication of December 2018 on strength­en­ing the inter­na­tion­al role of the euro laid out some key actions to enhance the euro’s sta­tus. That Communication was accom­pa­nied by a Recommendation on the inter­na­tion­al role of the euro in ener­gy and fol­lowed by five sec­toral con­sul­ta­tions on the role of the euro in for­eign exchange mar­kets, in the ener­gy sec­tor, in raw mate­ri­als mar­kets, in the trade of agri­cul­ture and food com­modi­ties and in the trans­port sector.

For More Information

Commission’s com­mu­ni­ca­tion

Communication of December 2018 ‘Towards a stronger inter­na­tion­al role of the euro’

Recommendation on the inter­na­tion­al role of the euro in energy

Sectoral con­sul­ta­tions on the role of the euro in for­eign exchange mar­kets, in the ener­gy sec­tor, in raw mate­ri­als mar­kets, in the trade of agri­cul­ture and food com­modi­ties and in the trans­port sector

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