COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL (EURO SUMMIT), THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards a stronger international role of the euro
Date: 2018-12-05
Institutions: European Commission, Secretariat-General
Subjects: Economic and Monetary Union, capital market, euro, euro area, financial market, financial policy, foreign exchange market, international finance, monetary policy, the EU's international role

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 5.12.2018  COM(2018) 796 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL (EURO SUMMIT), THE COUNCIL, THE EUROPEAN CENTRAL BANK, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards a stronger international role of the euro  
 
 
1. 

INTRODUCTION: THE EURO AS A SYMBOL OF UNITY, SOVEREIGNTY AND STABILITY 

The 2017 Rome Declaration1, agreed on the occasion of the 60th anniversary of the 
Treaty  of  Rome,  stated  that  a  stronger  European  Union  was  a  necessity.  The  EU 
Leaders emphasised in  particular that the  EU should  become a stronger  global actor.  It 
must  be  better  able  to  withstand  global  shocks,  shape  global  events  and  be  better 
equipped to shoulder international responsibilities.  

In his State of the Union Address of September 2018, President Juncker highlighted 
the strategic importance of the euro in this context and called on action to make it 
play  its  full  role  on  the  global  scene:  “[By]  next  year,  we  should  also  address  the 
international role of the euro. The euro is 20 years young and has already come a long 
way – despite its critics.  It is now the second most used currency in the world with 60 
countries  linking  their  currencies  to  the  euro  in  one  way  or  another.  But  we  must  do 
more to allow our single currency to play its full role on the international scene.” 

In its twenty years of existence, the euro has become a mark of Europe’s economic 
strength and a symbol of Europe in the world. 340 million European citizens use euro 
banknotes  and  coins  every  day  across  the  euro  area’s  19  Member  States.  Europeans 
identify the euro as one of the main symbols of the European Union2. Ten years after the 
financial  crisis  shook  the  world,  the  architecture  of  Europe's  Economic  and  Monetary 
Union  has  been  significantly  reinforced  and  public  support  for  the  euro  stands  at  new 
highs.3  With  time,  the  practical  benefits  of  the  euro  are  also  becoming  more  visible: 
stable  prices,  lower  transaction  costs  for  citizens  and  businesses,  more  transparent  and 
competitive  markets  and  increased  intra-EU  and  international  trade.  With  its  single 
currency, the Union remains the most integrated economic area in the world offering an 
investment friendly environment.  

Historically global developments have always played a role in further economic and 
monetary integration within Europe, including the move towards a single currency. 
Due  to  the  currency  market  turbulences  in  the  late  1960s,  the  Heads  of  State  or 
Government of the European Communities at the time requested the Council to draw up 
a plan for closer monetary integration. The resulting Werner Report4, published in 1970, 
delivered  an  ambitious  plan  to  achieve  Economic  and  Monetary  Union.  The  Werner 
Report was based on the assumption that exchange rates to the US dollar would remain 
stable. However, on 13  August  1971, President  Nixon of the United States of  America 
decided  to  suspend  the  US  dollar’s  convertibility  into  gold,  thereby  ending  unilaterally 
the fixed exchange rate system that had existed since the Second World War.  

1   Rome  Declaration  of  the  Leaders  of  27  Member  States  and  of  the  European  Council,  the  European 

Parliament and the European Commission.  
Standard Eurobarometer 89: 
http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/Survey/getSurveyDetail/instruments/ST
ANDARD/surveyKy/2180  
Flash Eurobarometer 473: Overall support for our single currency has returned to its highest level. 74 
%  of  citizens  across  the  euro  area  say  that  the  euro  is  good  for  the  EU,  according  to  the  latest 
Eurobarometer survey. https://ec.europa.eu/info/news/eurobarometer-2018-nov-20_en   
  http://ec.europa.eu/economy_finance/publications/pages/publication6142_en.pdf  

2 

3 

4  

1 

 
 
                                                 
At that point, Europe had to decide to take its destiny in its own hands and advance 
on  the  path  towards  a  single  currency,  which  started  with  exchange  rate 
mechanisms5  and  was  finally  achieved  on  1  January  1999.  This  has  gone  hand-in-
hand with  the definition of a common  economic governance framework  through which 
Member States coordinate their policies and assume joint responsibilities. 

Since  its  launch  20  years  ago,  the  euro  has  been  the  second  most  important 
international currency:  

  As a safe store of value, the euro represents around 20 % of international reserves of 

foreign central banks.  

  Businesses  and  foreign  Governments  use  the  euro  for  issuing  debt.  By  the  end  of 
2017, more than 20 % of debt issuance on international markets was denominated in 
euros.   

  The euro has become a widely accepted currency for international payments. About 
36  %  of  the  value  of  international  transactions  were  invoiced  or  settled  in  euros  in 
2017, compared to about 40 % for the US dollar. 

  Around 60 countries6 in the world are either using, will use or link their currency 
to the euro. The euro is the main currency of reference for most European Economic 
Area  countries,  as  well  as  smaller  neighbourhood  countries,  and  the  African  CFA7 
zone  (14  countries).  The  adoption  of  the  euro  by  further  European  Union  Member 
States,  a  Treaty  obligation  (except  for  Denmark  and  the  United  Kingdom),  will 
contribute to increase the weight of the single currency. 

However,  the  international  use  of  the  euro  has  not  yet  returned  to  the  situation 
where it was before the financial crisis8. For instance, the volume of euro-denominated 
foreign debt issuance reached a peak at 40 % before the crisis (in 2007) and now stands 
just above 20 %, similar to its share in 1999. 

5      For the history of the euro (including the 'snake-in-the-tunnel' and the Exchange Rate Mechanism   
       ERM) see: https://ec.europa.eu/info/about-european-commission/euro/history-euro/history-euro_en 
6 
7  CFA franc is the name of two currencies used in parts of West and Central African countries which are 

Including dependent territories. 

guaranteed by the French treasury and pegged to the euro. 

8  European Central Bank – The international role of the euro, June 2018. 

https://www.ecb.europa.eu/pub/pdf/ire/ecb.ire201806.en.pdf     

2 

 
                                                 
Graph 1: Currency composition of global foreign exchange reserves 

Source: Commission calculations based on IMF  

Graph 2: Currency composition of global payments 

Source: SWIFT 

Graph 3: Countries using or linking their currency to the euro 

European Union 

EUR-pegged 

USD-pegged 

Peg or managed float with currency basket incl. EUR 

Peg with other currency basket 

Source: Data based on IMF and ECB  

3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
In the wake of the crisis, Europe has taken determined action to increasingly make 
the euro a source of economic protection and empowerment. Building on the vision 
set  out  in  the  Five  Presidents’  Report9  of  June  2015  and  further  developed  in  the 
Reflection  Papers  on  the  Deepening  of  the  Economic  and  Monetary  Union10  and  the 
Future  of  EU  Finances11,  published  in  spring  2017,  the  Commission  set  out  a  roadmap 
for deepening the Economic and Monetary Union12. Strenghtening the international role 
of the euro is both the logical continuation of and a new frontier in this overall agenda, 
developed over the past four years. This is not a new issue: the international role of the 
euro has been subject to discussions since its inception, but there has never been a more 
suitable moment to take this forward.   

Supported  by  the  further  strengthening  of  Europe’s  Economic  and  Monetary 
Union, there is scope for the euro to develop further its global role and achieve its 
full potential, reflecting the euro area's political, economic and financial weight. The 
currency of choice of citizens,  business  and markets  accross the world  is not  static and 
liquidity  considerations  and  policy  choices.  The 
depends  on  historic  reasons, 
international role of individual currencies has shifted over the past centuries, with the US 
dollar emerging as the main global currency only after the Second World War, due to the 
United States’ economic strength, its developed financial system and stability.  

Recent  global  trends,  the  emergence  of  new  economic  powers  along  with  the 
development  of  new  technologies,  are  supporting  a  potential  shift  towards  a  more 
diversified and multipolar system of several global currencies. For instance, while the 
Chinese renminbi is not yet an international currency that could challenge the position of 
the  dollar  or  indeed  the  euro,  its  international  use  is  an  important  element  of  China’s 
reform  agenda.  This  is  reinforced  by  the  increasing  capacity  of  Chinese  importers  and 
exporters to make and accept payments in their own currency. At the same time, recent 
extraterritorial  unilateral  actions  by  third  country  jurisdictions  like  in  the  case  of  re-
imposed  sanctions  on  Iran13,  together  with  recent  challenges  to  the  international  rules-
based  governance  and  trade,  are  a  wake-up  call  regarding  Europe's  economic  and 
monetary sovereignty. 

9 

https://ec.europa.eu/commission/publications/five-presidents-report-completing-europes-economic-
and-monetary-union_en  

10  https://ec.europa.eu/commission/publications/reflection-paper-deepening-economic-and-monetary-

union_en  

11  https://ec.europa.eu/commission/publications/reflection-paper-future-eu-finances_en  
12  https://ec.europa.eu/commission/publications/completing-europes-economic-and-monetary-union-

factsheets_en  

13  On 8 May 2018, the United States decided to withdraw from the Joint Comprehensive Plan of Action 
and unilaterally reinstate all  previously lifted sanctions against Iran,  which entered into force in two 
stages,  on  7  August  and  5  November.  The  European  Union  has  reaffirmed  its  commitment  to  the 
nuclear deal and taken forward a number of measures to maintain economic links with Iran, including 
the  activation  of  the  Blocking  Statute,  which  seeks  to  mitigate  the  extraterritorial  effects  of  U.S. 
sanctions on EU businesses. 

4 

 
                                                 
2.  THE CASE FOR AN INCREASED INTERNATIONAL ROLE OF THE EURO 

The  strengthening  of  the  euro's  international  role  should  be  conceived  as  part  of 
Europe’s  broader  commitment  to  an  open,  multilateral  and  rules-based  global 
economy.  It  would  help  improve  the  resilience  of  the  international  financial  system, 
providing  market  operators  across  the  globe  with  additional  choice  and  making  the 
international  economy  less  vulnerable  to  shocks  linked  to  the  strong  reliance  of  many 
sectors on a single currency.  

At  the  same  time,  it  can  bring  tangible  benefits  "at  home":  it  would  allow  the 
European  Union  to  enhance  the  protection  of  its  citizens  and  businesses,  to  uphold  its 
values  and  to  promote  its  interests  in  shaping  global  affairs  according  to  rule-based 
multilateralism. In particular, the euro should continue to facilitate and expand Europe's 
responsible trade agenda, allowing European companies to trade without disruptions all 
over the world to the benefit of Europe's economy, while at the same time safeguarding 
the European social and regulatory model at home. 

The decision to use a currency is ultimately made by market participants and there 
are good reasons why economic actors might wish to invest and hedge in different 
currencies. The objective is not to interfere in commercial freedom or limit choice, but 
rather to expand the choice for market participants by ensuring that the euro represents a 
strong and reliable alternative in all relevant ways. 

BOX 1: Benefits of an increased international use of the euro 

A wider global use of the euro can be beneficial in several ways:  

  Lower  cost  and  lower  risk  of  trading  internationally  for  European  businesses. 
Trading in euro rather than in a foreign currency will remove the exchange risk and 
other  currency  related  costs  especially  for  small  and  medium-sized  European 
businesses.  

  Additional choice for market operators across the globe. 
  Lower  interest  rates  paid  by  European  households,  businesses  and  Member 
States.  A  more  attractive  euro  as  a  safe  store  of  value  reduces  the  interest  rate  (or 
return) demanded by investors.  

  More reliable access to finance for European businesses and governments, even 
in  periods  of  external  financial  instability,  as  European  financial  markets  would 
become deeper, more liquid and integrated. 

  Stronger autonomy of European consumers and businesses, allowing them to pay 
or receive payments for their international trade, and finance themselves with reduced 
exposure  to  legal  actions  taken  by  third  country  jurisdictions,  like  extraterritorial 
sanctions.  

  Improved  resilience  of  the  international  financial  system  and  economy,  making 

them less vulnerable to exchange rate shocks.  

The  benefits  attached  to  a  wider  use  of  an  international  currency  come  with 
increased  global  responsibilities,  in  line  with  central  banks'  respective  mandates. 
Although the benefits  of a stronger international  role of the euro outweigh the possible 
challenges,  its  consequences  would  have  to  be  carefully  calibrated,  for  example  in 
relation to the balance of payments for the euro area vis-à-vis the rest of the world.   

5 

 
There are still several factors holding back a stronger international use of the euro 
and Europe's financial sovereignty: 

  The Bretton Woods system established the US dollar as the global international 
reserve  currency  after  the  Second  World  War,  effectively  replacing  the  pound 
sterling  as  the  main  global  currency.  In  parallel,  the  US  dollar  has  also  become  the 
standard currency of commodities trades and the predominant currency for derivative 
operations14. Once a currency emerges as the incumbent standard, its network effects 
make  it  even  more  attractive,  as  its  wider  use  allows  to  conduct  further  complex 
financial  market  operations  with  higher  liquidity15.  This  hampers  the  emergence  of 
alternative reserve currencies.  

  The  cost  of  using  the  US  dollar  in  certain  transactions  remains  lower  than  the 
cost of using the euro, partly as a consequence of the role of the US dollar as the 
incumbent  standard.  Thanks  to  the  higher  liquidity  of  the  US  dollar,  many  money 
market16  operations  become  less  costly  by  using  the  dollar  as  a  currency  vehicle 
compared to the direct use of the euro. 

  The  euro  is  a  much  younger  currency  and  its  structures  need  to  be  further 
developed and completed. Further steps are necessary to complete the Economic and 
Monetary Union architecture, which underpins the single currency. 

  Some  of  the  most  relevant  global  financial  market  infrastructures  focus 
primarily  on  non-euro  currencies  and/or  are  located  outside  the  euro  area  and 
the  Union.  The  international  financial  system  and  markets  largely  and  increasingly 
rely on connected platforms for trading, clearing and payment settlement.  A  number 
of these platforms are located outside the euro area or are operated by non-European 
companies  for  historical  reasons  and  liquidity  considerations,  and  hence  are 
potentially more exposed to third-country influence.  

Several  policy  avenues  could  boost  the  attractiveness  of  the  euro,  increase  the  share  of 
payments  made  in  euro  in  strategic  sectors  and  further  strengthen  European  economic 
and financial sovereignty domestically as well as abroad. The main avenues are outlined 
below. 

3.  COMPLETING  EUROPE'S  ECONOMIC  AND  MONETARY  UNION  AS  A  FOUNDATION 

FOR A STRONG INTERNATIONAL ROLE OF THE EURO 

International currencies must be backed by large, stable and efficiently functioning 
economies  and  financial  systems  that  are  attractive  to  international  users  and 
investors.  While  the  international  role  of  the  euro  is  mainly  driven  by  market  forces, 
sound  national  fiscal  and  growth-enhancing  policies,  a  healthy  financial  sector  and  the 
respect  of the EU's economic and fiscal  framework, provide the foundation for and are 
essential to the credibility of Europe's single currency. 

14  Financial instruments whose value depends on the value of other underlying variables. 
15 
16  Markets where financial instruments with high liquidity and very short maturities are traded.   

Increased means to conduct transactions due to a larger market. 

6 

 
                                                 
Delivering an even more stable and resilient economic and financial framework can 
help  raise  the  euro's  attractiveness  globally.  Europe  could  reinforce  the  international 
role  of  the  euro  by  making  it  even  more  compelling  as  a  means  of  trade  payment  and 
trustworthy  investment  currency.  This  means  first  and  foremost  completing  the 
Economic  and  Monetary  Union,  Banking  Union  and  Capital  Markets  Union  to 
deliver sustained growth and provide for enhanced  resilience to adverse shocks. In 
particular, a complete Banking Union17 would provide for stronger and better supervised 
banks  providing  an  even  more  resilient  banking  sector  in  Europe  and  increasing 
confidence  in  the  EU  financial  sector  and  the  single  currency.  A  deepened  Capital 
Markets Union18 would provide more diversified and liquid financial markets and would 
deliver  increased  private-sector  risk  sharing.  This  in  turn  would  mobilise  capital  and 
channel  it  to  more  companies,  including  small  and  medium-sized  enterprises,  and 
infrastructure  projects.  Deeper  and  more  integrated  capital  markets  will  provide 
businesses  with  a  greater  choice  of  funding  at  lower  costs,  offer  new  opportunities  for 
savers  and  investors  and  make  the  financial  system  more  resilient,  thus  increasing  the 
attractiveness of the euro. The use of the euro for money laundering or terrorist financing 
purposes is also prevented and prosecuted in an effective manner. 

The  Commission  has  made  several  key  proposals  to  the  co-legislators  to  complete 
the Banking Union and deliver Capital Markets Union, which are still pending final 
adoption. In particular, finalising the backstop to the Single Resolution Fund (to be able 
to manage even a large banking crisis) and the European Deposit Insurance Scheme (to 
provide an even stronger and more uniform degree of deposit insurance) would reinforce 
financial  stability  by  further  reducing  exposure  of  banks  to  their  national  sovereigns, 
while  the  Commission's  proposed  banking  package  and  non  performing  loans  package 
would further reduce risks in the banking sector. 

Increasing  the  available  pool  of  euro-denominated  assets  with  a  higher  credit 
ratingcontributes to the development of the European financial sector and enhances 
the  global  relevance  of  EU  financial  regulation  as  well  as  EU-based  payment 
systems.  The  Commission's  proposal19  on  Sovereign  Bond  Backed  Securities,  to  be 
issued by the private sector, would be one possibility of increasing the available amount 
of euro-denominated assets with a high credit rating and a high level of attractiveness for 
international investors. Such assets would therefore increase the liquidity in euro, which 
is one important feature where the euro is at a disadvantage in global markets compared 
to the US dollar. 

In  the  context  of  preparing  the  Union’s  next  Multiannual  Financial Framework20, 
the  Commission  has  made  proposals  to  further  strengthen  the  performance  and 
resilience of the euro area economies with dedicated budgetary instruments, as well 
as proposals  supporting  non-euro countries wishing to join  the euro.  The proposed 
European  Investment  Stabilisation  Function21  would  allow  for  a  better  absorption  of 
large  asymmetric  shocks  in  the  euro  area,  which  would  in  turn  increase  investor 

17  Third  Progress  Report  on  the  reduction  of  non-performing  loans  and  further  risk  reduction  in  the 

Banking Union – COM (2018) 766 final of 28 November 2018. 

18  COM(2018) 767 final of 28 November 2018. 
19  COM(2018) 339 final of 24 May 2018. 
20   COM(2018) 322 final of 2 May 2018. 
21  COM(2018) 387 final of 31 May 2018. 

7 

 
                                                 
confidence in the euro. In parallel, the Reform Support Programme22 should improve 
the  implementation  of  structural  reforms,  which  are  crucial  to  enhance  cohesion  and 
competitiveness,  raise  productivity,  and  foster  the  resilience  of  economic  and  social 
structures  in  all  Member  States.  The  Reform  Support  Programme  includes  a 
Convergence  Facility,  with  the  aim  of  helping  non-euro  area  Member  States  on  their 
way to joining the euro.  

A greater international role also presupposes adequate institutional capacity and a 
more  unified  representation  to  coordinate  positions  and  speak  with  one  voice. 
Building on the role already played by the European Central Bank, the Eurogroup  and 
the  Commission,  which  are  defined  in  the  EU  Treaties,  several  Commission  proposals 
represent further steps in this direction. In December 2017, the Commission presented a 
proposal to establish a European Monetary Fund, anchored within the European Union’s 
legal  framework  and  built  on  the  well-established  structure  and  governance  of  the 
European  Stability  Mechanism.  Moreover,  the  Commission  proposal23  to  improve  the 
external representation of the euro area in international financial organisations is meant 
to help strengthening the euro area stance in the international arena and make sure that its 
voice is clearly communicated globally. By combining existing functions at EU level and 
bringing together closely linked policy instruments, the position of a European Minister 
of  Economy  and  Finance  would  help  to  create  new  synergies  and  thus  improve  the 
overall coherence and effectiveness of EU economic policy-making over time, including 
the capacity to speak with one voice on euro matters.  

4.  FURTHER INITIATIVES TO DEVELOP THE INTERNATIONAL ROLE OF THE EURO 

This Communication also sets out initiatives developing the international role of the euro 
in  three  different  dimensions:  in  the  European  financial  sector  (to  ensure  deep  and 
complete  financial  markets  denominated  in  euros),  in  the  international  financial  sector 
(where an increased role of the euro would be beneficial to global financial stability) and 
in key strategic sectors where the euro could further develop its role (for example in the 
areas of energy, commodities and aircraft manufacturing). 

4.1.  Additional measures to foster a deep European financial sector 

Increasing  the  attractiveness  of  the  euro  will  increase  its  use,  which  will  in  turn 
make it even more attractive. This can create a virtuous spiral.  

Additional and more targeted measures within the Banking Union and the Capital 
Markets Union support the financial sovereignty of the euro area. Financial markets 
and  infrastructures  in  the  euro  area  play  an  integral  role  in  offering  opportunities  to 
enhance the international role of the euro. They do so by providing dependable and stable 
financial  services  and  transaction  opportunities.  The  scale  and  autonomy  of  euro-
denominated  services  depends  on  whether  market  participants  find  them  cost-effective, 
easy  and  safe  for  the  conduct  of  their  international  business  and  to  store  their  value 
reserves in euros. Consequently, measures that enhance stability and liquidity, and widen 
the range of financial services denominated in euro, strengthen the international role of 
the  euro.  Moreover,  in  the  context  of  a  reinforced  role  of  the  euro,  the  EU  should 
continue  to  advance  its  regulatory  agenda  in  areas  like  the  fight  against  money 

22  COM(2018) 391 final of 31 May 2018. 
23   COM(2015) 602 final of 21 October 2015. 

8 

 
                                                 
laundering24  and  terrorist  financing25.  Stringent  supervision  of  financial  transactions 
contributes to global security, integrity of the financial system and sustainable growth. 

The following targeted measures would not only  make the euro more attractive to 
use,  they  would  also  make  the  euro  area  more  resilient  with  regard  to  outside 
influence:  

First,  the  Commission  seeks  to  widen  the  use  of  the  euro  by  strengthening  the 
liquidity  and  resilience  of  European  market  infrastructures.  With  the  overarching 
objective  of  reducing  systemic  risk,  the  European  Market  Infrastructure  Regulation26 
introduced  the  obligation  for  market  participants  to  clear27  certain  financial  contracts  
(e.g.  over-the-counter  derivatives  contracts,  such  as  derivatives  providing  insurance 
against interest rate changes) via dedicated market infrastructures28. Importantly, this has 
created liquid clearing markets for euro denominated products which are accessible to all 
counterparties.  Well-developed  market  infrastructures  for  clearing  provide  market 
participants  with  readily  available  and  efficient  insurance  against  future  changes  of 
interest or exchange rates in their commercial transactions. The broad availability of such 
euro-denominated markets  will therefore support  the attractiveness  of the euro for such 
transactions.  Subject  to  the  determination  procedure  envisaged  in  the  above-
mentioned Regulation and the conditions set out therein, in order to promote liquid 
and  efficient  central  clearing  solutions,  the  Commission  could  extend  the  scope  of 
derivative  contracts  covered  by  the  clearing  obligation.  Moreover,  the  Commission 
could consider extending the use of clearing services to a wider range of counterparties. 

Secondly,  the  Commission  aims  to  further  improve  the  efficiency  of  euro  area 
financial  markets,  by  ensuring  a  reliable  framework  for  the  production  of  a  full 
range of trustworthy interest rate benchmarks29. Market participants use interest rate 
benchmarks as  reference in many contracts and financial products. The EU Benchmark 
Regulation30  requires  financial  benchmarks  in  the  EU  and  euro  area  to  be  more 
transparent and reliable. The full implementation of this Regulation should therefore 
help 
increase  the  attractiveness  of  trading  and  pricing  euro-denominated 
instruments31.  The  Commission  will  facilitate  further  coordination  and  cooperation 
across  market  segments,  benchmark  administrators,  contributing  banks,  national 
competent authorities and the European Central Bank.  

24  COM(2018) 645 final of 12 September 2018. 
25  COM(2018) 640 final of 12 September 2018. 
26  Regulation (EU) 2012/648, OJ L 201, 27.7.2012, p.1. 
27   Matching buy and sell orders. 
28   Central clearing counterparties. 
29  Reference rates are provided in many financial contracts, for instance those indexed to variable interest 
rates,  to  value  balance  sheet  items  and  to  price  derivatives  such  as  forward  contracts,  options  and 
swaps. 

30   Regulation (EU) 2016/1011, OJL 171, 29.6.2016 p.1. 
31 

In  particular  this  would  apply  to  money  markets  (markets  where  financial  instruments  with  high 
liquidity  and  very  short  maturities  are  traded).  Market  participants  use  the  money  market  for 
borrowing and lending in the short term, i.e. up to one year.  

9 

 
 
 
                                                 
Thirdly, the Commission supports a fully integrated instant payment system in the 
EU,  to  reduce  the  risks  and  the  vulnerabilities  in  retail  payment  systems  and  to 
increase  the  autonomy  of  existing  payment  solutions.  EU  citizens  rely  on  a  small 
number  of  global  providers  when  making  cross-border  card  and  online  payments.  As 
clearing even of intra-European payments often takes place outside the EU, disruption for 
technical,  economic  and  legal  reasons  that  may  originate  from  outside  the  EU  exposes 
the  retail  payment  system  to  unnecessary  vulnerabilities.  Moreover,  the  market 
dominance  of  few  international  card  schemes  raises  questions  from  a  governance 
perspective,  as  it  significantly  reduces  the  influence  of  European  payment  service 
providers  on  developments  in  major  part  of  the  retail  payments  market.  An  EU-wide 
cross-border instant payment solution would complement current card schemes, reducing 
the  risk  of  external  disruption  and  making  the  EU  more  efficient  but  also  more 
autonomous. The introduction of euro instant payments also offers opportunities for the 
development  of  efficient  new  retail  payment  solutions  also  for  cross-border  payments, 
which can bring benefits to European citizens, businesses and banks.EU-wide standards 
for  euro  instant  payments  have  already  been  laid  down  in  the  SEPA  (single  euro 
payments  area)  Instant  Credit  Transfer  scheme  launched  in  November  2017.  In 
November  2018,  the  European  Central  Bank  launched  its  Target  Instant  Payment 
Settlement  (TIPS)  system,  facilitating  cross-border  instant  payments  in  the  EU.  The 
Commission  will  explore  measures  in  order  to  facilitate  the  cross-border  use  of 
payment  solutions  developed  in  individual  Member  States.  It  will  further  support 
work  in  the  Euro  Retail  Payments  Board  (under  the  auspices  of  the  European 
Central  Bank) to ensure the interoperability of existing instant payment solutions. 
The Commission will also work with relevant stakeholders on a joint commitment 
to ensure the wide availability of instant payment services for customers, including 
for  cross-border  payments.  The  Commission  will  take  stock  of  the  progress 
achieved in its review of the Payment Account Directive, which is due in 2019.  

Fourthly, the Commission will explore the possibility to develop further the role of 
the euro in foreign exchange markets. Trading in foreign exchange market takes place 
via  so-called  currency  pairs,  for  example  the  euro  and  the  dollar  or  the  euro  and  the 
Japanese  yen.  Today,  all  of  the  most  liquid  currency  pairs  involve  the  US  dollar 
(including the euro/US dollar, which is the most liquid pair). Trades involving the euro 
and  currencies  other  than  the  US  dollar  generally  go  through  the  US  dollar 
("triangulation").  One  of  the  reasons  is  that  the  US  dollar  is  being  widely  used  as  the 
global reserve currency, underpinned by a highly developed and liquid government bond 
market.  It  would  be  worthwhile  to  explore  the  reasons  for  the  current  situation  and 
whether  market  liquidity  for  particular  currency  pairs  of  the  euro  and  currencies  other 
than the US dollar could be further developed. Furthermore, large market makers32 play a 
key role in the foreign exchange markets and euro area banks could further develop their 
role  in  such  market-making  activities.  The  Commission  will  launch  a  targeted 
consultation  with  financial  market  actors  to  identify  potential  obstacles  and 
incentives  with  a  view  to  enhancing  the  role  of  the  euro  in  the  foreign  exchange 
market. 

32   A company always ready to buy or sell a financial asset at an openly quoted price on a long-term basis. 

10 

 
 
                                                 
4.2. 

Initiatives linked to the international financial sector 

The  international  role  played  by  the  euro  to  safeguard  global  financial  stability 
could be expanded progressively. The cooperation between Central Banks to safeguard 
financial stability helps to ensure that European companies can trade allover the world. In 
the  aftermath  of  the  financial  crisis,  the  European  Central  Bank  engaged  with  its 
counterparts to preserve financial stability and avoid disruptions in the world economy, 
for  instance,  with  the  establishment  of  a  number  of  currency  swap  lines33  as  a  foreign 
liquidity backstop in case of market impairments, in line with its mandate. This practice 
has been beneficial for the global trading of European companies. 

In  order  to  lead  by  example,  European  bodies  and  mechanisms  should  be 
encouraged  to  increase  their  share  of  debt  denominated  in  euro.  European-level 
entities  have  been  issuing  debt  for  many  years,  largely  in  euro  but  also  in  foreign 
currencies, notably to provide project financing (the European Investment Bank Group) 
or  financial  assistance  to  Member  States  (the  European  Financial  Stability  Facility,  the 
European Stability Mechanism). The issuances by  these EU-level  bodies  have attracted 
global  investors,  including  during  the  crisis,  and  have  increased  the  level  of  euro 
denominated high-quality assets.  

Europe  could  further  develop  its  economic  diplomacy  by  engaging  with  global 
partners  to  promote  the  use  of  the  euro  in  payments  and  as  a  reserve  currency. 
Europe is an important geo-political actor, exercising economic influence in the world34. 
Engaging diplomatically with international partners to encourage the use of the euro and 
advance  Europe's  position  on  how  the  global  financial  architecture  should  develop, 
would help reinforcing the international role of the euro. 

The Commission together with Member States and relevant EU bodies will engage 
with  global  partners  for  an  increased  use  of  the  euro.  High-level  commercial 
missions, where the importance of the euro is stressed to business delegations, could be 
considered. Given that the latest developments in emerging market economies may have 
raised  the  appetite  for  diversification  in  terms  of  foreign  currency-denominated  debt 
exposure,  some  of  these  actions  could  focus  on  an  increase  of  foreign  debt  issuances 
denominated in euro.  

Finally,  the  External  Investment  Plan35  was  adopted  in  September  2017  to  help 
boost investment in partner countries in Africa and the European Neighbourhood, 
including  via  the  provision  of  technical  assistance  to  authorities  and  businesses. 
Technical  support  could  be  used  to  improve  the  access  of  developing  countries  to  the 

33  A  currency  swap  line  is  an  agreement  between  two  central  banks  to  exchange  their  respective 
currencies. By preserving access to foreign liquidity in adverse circumstances, swap lines make it safer 
to do business with other parts of the world. In 2011, the ECB, along with the Bank of England, the 
Bank  of  Canada,  the  Bank  of  Japan,  the  Federal  Reserve  and  the  Swiss  National  Bank,  set  up  a 
network of swap lines enabling the participating central banks to obtain currency from each other.  In 
2013 the ECB established a currency swap agreement with China. 

34   As an example, the European Union and its Member States continue to be the world’s leading provider 
of Official Development Assistance with an overall amount of EUR 75.7 billion in 2017..In the context 
of the External Investment Plan, an initial EU input of EUR 4.1 billion is expected to leverage EUR 44 
billion of investment. In the next programming period the EU could provide financial support to third 
countries for a total of EUR 123 billion in third countries, if the Commission proposals are adopted. 
35  https://ec.europa.eu/commission/eu-external-investment-plan/what-eus-external-investment-plan_en  

11 

 
                                                 
euro payment system, for instance in order to comply with the EU anti-money laundering 
legislation, and to facilitate trade linkages. 

4.3.  Further steps to increase the use of the euro in key strategic sectors: energy, 

commodities and transport sector 

Despite  the  significant  share  of  the  euro  in  international  payments,  there  is  still 
scope  to  expand  its  use  in  key  strategic  sectors.  In  spite  of  their  position  as  large 
buyers  as  well  as  major  producers,  European  businesses  still  trade  in  US  dollar  in  key 
strategic  markets,  often  even  between  themselves.  This  exposes  businesses  to  currency 
risks  and  political  risks,  such  as  international  sanctions  that  directly  affect  dollar 
denominated transactions.  

In the energy sector, over 80 % of Europe's energy imports are priced and paid for 
in US dollar, despite supplies coming mainly from Russia, the Middle East and Africa 
and the EU being the world's largest energy importer. The EU's annual energy import bill 
averaged EUR 300 billion over the last 5 years. More than 93 % of the traded volumes in 
the domain of energy are accounted for by oil, where currently  all contracts  are dollar-
denominated. For natural gas, about 70 % of EU imports are referenced in US dollar. Gas 
contracts traded on the EU gas hubs are denominated in euro.  

In  the  case  of  raw  materials  (metals  and  minerals)  and  food  commodity  markets, 
the situation is similar. Europe consumes about 10 % of global raw materials and is  a 
major  importer.  Nevertheless,  the  majority  of  raw  materials  are  traded  on  global 
exchanges  in  US  dollar.  This  also  applies  to  highly  standardised  food  commodity 
markets,  such  as  grains,  oilseeds  and  sugar.  Europe  is  an  important  exporter  of  soft 
wheat, sugar and olive oil but the use of the euro is mainly limited to intra-EU trade. 

In  the  transport  sector,  for  example  a  recent  study36  concludes  that  nearly  all 
invoicing in the aircraft manufacturing sector is done in US dollar, even within the 
euro  area.  More  than  half  of  Airbus’  revenues  are  denominated  in  US  dollar  with 
approximately  60  %  of  such  currency  exposure  "naturally  hedged"37  by  US  dollar-
denominated costs. The remainder of costs is incurred primarily in euro.  

There  are  several  factors  explaining  the  marginal  use  of  the  euro  in  key  sectors, 
including historical inertia, network effects and liquidity reasons. For instance, there 
is  a  lack  of  euro-denominated  benchmarks  for  international  trading  in  both  oil  and 
commodities38. The commodities markets have been dominated by the US dollar because 
of the earlier development of the Chicago and New York exchanges. As regards aircraft 
manufacturing, fuel prices quoted in dollar influence the currency used in the entier value 
chain.  Moreover,  the  aircraft  market,  including  insurance  and  maintenance,  is  a  global 
market that does not allow regional price differentiation. 

36   JRC study: http://publications.jrc.ec.europa.eu/repository/bitstream/JRC96913/lbna27754enn.pdf 
37   A  natural hedge is  the reduction in risk by institutions  that are  exposed to large swings  in exchange 
rates  by  exploiting  their  normal  operating  procedures.  This  can  include  receiving  income  in  another 
country and currency while incurring expenses in that same currency. 

38   In the oil sector, the first price benchmarks for the physical market were developed in the late 1980s by 
major oil companies and price reporting agencies using US dollar to facilitate global transactions and 
comparisons across different crude grades. 

12 

 
                                                 
The  Commission  intends  to  present  in  the  coming  months  several  targeted 
initiatives in strategic sectors: 

  A  Commission  Recommendation  is  adopted  today  in  order  to  promote  a  wider 
use  of  the  euro  in  international  energy  agreements  and  transactions.  The 
Commission recommends that the euro should be used for contracts concluded within 
the framework of intergovernmental energy  agreements between Member States and 
third  countries.  A  wider  use  of  the  euro  in  energy-related  transactions  by  European 
market participants and companies providing financial services is also recommended. 
In addition, the Commission will launch a consultation and invite stakeholders to 
express  their  views  on  the  market  potential  for  a  broader  use  of  euro-
denominated  transactions  in  the  areas  of  oil,  refined  products  and  gas.  In 
particular,  the  consultation  will  gather  feedback  on  the  need  to  set-up  euro-
denominated crude oil reference contracts and reinforce contracts on refined products. 
The consultation will also gather stakeholders’ views on the expansion of the use of 
euro-denominated gas contracts. 

  In the sector of raw materials (metals and minerals) and food commodities, the 
Commission  will  engage  in  a  broad  consultation  with  stakeholders  in  order  to 
identify  ways  of  increasing  trading  in  euro,  especially  in  the  context  of 
transactions  at  exchanges  located  in  Europe  and  direct  transactions  between 
European companies. A general European Commodities Summit is planned for 2020 
to  continue  the  discussions  with  all  main  actors.  In  addition,  the  Commission  will 
continue  with  a  market-oriented  Common  Agricultural  Policy,  allowing 
the 
development of international trade in agricultural commodities to develop further. The 
Commission  will  also  favour  the  recourse  to  futures  markets  and  contracts  in  euro 
(e.g.  through  awareness  raising  and  training)  and  increased  market  transparency  for 
agricultural and food commodities in euro39. 

  A consultation will be launched to investigate possible actions to promote the use 
of the euro by transport sector manufacturers (aircraft, maritime and railways). 
The consultation will explore in a more detail the reasons why the euro is not used for 
many  of  the  most  relevant  international  transactions  and  will  help  identifying 
conditions that would enable the promotion of the euro in transactions with European 
businesses. 

The Commission will carry out these different work streams in parallel and report 
on progress by summer 2019. 

39  An increasing number of price references expressed in euro are now published through the EU market 
observatories  since  they  were  established  in  2014  (while  in  the  past,  most  information  available  to 
traders  was  expressed  in  US  dollars).  This  will  be  further  consolidated  with  the  proposal  ensuring 
more market transparency, planned for adoption in 2019. 

13 

 
 
                                                 
5.  CONCLUSION 

Building on the Roadmap for the completion of Europe's Economic and Monetary 
Union, there is scope for the euro to develop further its global role, so that it is more 
commensurate to the euro area’s political, economic and financial weight. This will 
allow the EU to better protect its citizens and businesses, uphold its values and promote 
its interests. It will also make the international economy less vulnerable to shocks linked 
to a single dominant currency and support a balanced, rules-based international political 
and economic order. 

The Commission invites EU Leaders to discuss the international role of the euro at 
the December European Council and the Euro Summit, as part of their discussion 
on  the  completion  of  Europe's  Economic  and  Monetary  Union.  Strengthening  the 
international role of the euro will require the further strengthening of the structures of the 
Economic and Monetary Union, including through the adoption of all pending proposals 
for  completion  of  the  Banking  Union  and  decisive  progress  on  the  Capital  Markets 
Union.  

In  addition,  the  Commission will  pursue  the  targeted  initiatives  set  out  above  and 
encourages all relevant actors and stakeholders to take an active role in this process. 

14