The European Commission published on Wednesday non-binding proposals to boost the role of the euro in international payments and its use as a reserve currency to challenge the dominance of the dollar.
The move follows the decision by the United States to withdraw from an agreement with Iran on its nuclear programme. That has forced many European companies to stop trading with Iran to avoid US sanctions.
The EC called on companies and states to increase their use of the euro in energy contracts. It said it would study possible measures to promote the European Union currency in financial and commodity markets.
"The decision to use a currency is ultimately made by market participants," the EC acknowledged. The most effective way to widen the euro's international role was to overhaul the 19-country currency union and adopt financial reforms that have been blocked for years by conflicting national interests. In the 20 years since its adoption, the euro's international role reached its peak at the beginning of the last decade. Its use dropped during the 2007-08 financial crisis.
The euro has not recovered since and the dollar remains the currency most used in the world. Sixty per cent of sovereign debt issuance and global foreign exchange reserves are in dollars. The euro is the second global currency, but its share of each market is just 20 per cent.
The EC admitted the dollar dominance was due to higher liquidity, lower transaction costs and its use as a benchmark in commodities and derivatives markets - prerogatives that can hardly be challenged in the short term.
But it argued that a stronger euro would be positive not only for Europe but also for the wider world, which "would help improve the resilience of the international financial system".
"More than promotion, you need reforms, stability and convincing investors," a senior central banker said, airing widespread doubts at the European Central Bank (ECB), the body in charge of the euro, over the EC plan.
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However, recent trade conflicts and the use of the dollar as an instrument to force sanctions on Iran have raised concern in other countries about the dollar. That could contribute to a stronger role for the euro, EU officials admit.
The EC pushed for strengthening the euro's role in international payments, where it holds a global share similar to the dollar, more than 35 per cent.
The EU is the world's largest energy importer with an average import bill of €300 billion (Dh1.25 trillion), the Commission said, urging EU states to switch to a default use of the euro in future energy international agreements.
It said it would also consider moves to increase the use of the euro by aircraft manufacturers, such as France-based Airbus, and in commodities markets.
In the financial sector, the EU executive said it could propose extending the scope of derivative contracts that have to go through clearing houses in a bid to expand the market in euro-denominated financial products.
It said it would also explore measures to facilitate an ECB plan for a European instant payment system, which could challenge the dominance of U.S. payment cards and the emerging financial role of U.S. digital giants in payment services.
The plan was proposed by the ECB last week, but so far only eight mostly medium or small-sized banks from Spain, Germany and France have signed up.
Euro 2020
Group A: Italy, Switzerland, Wales, Turkey
Group B: Belgium, Russia, Denmark, Finland
Group C: Netherlands, Ukraine, Austria,
Georgia/Kosovo/Belarus/North Macedonia
Group D: England, Croatia, Czech Republic,
Scotland/Israel/Norway/Serbia
Group E: Spain, Poland, Sweden,
N.Ireland/Bosnia/Slovakia/Ireland
Group F: Germany, France, Portugal,
Iceland/Romania/Bulgaria/Hungary
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Teaching your child to save
Pre-school (three - five years)
You can’t yet talk about investing or borrowing, but introduce a “classic” money bank and start putting gifts and allowances away. When the child wants a specific toy, have them save for it and help them track their progress.
Early childhood (six - eight years)
Replace the money bank with three jars labelled ‘saving’, ‘spending’ and ‘sharing’. Have the child divide their allowance into the three jars each week and explain their choices in splitting their pocket money. A guide could be 25 per cent saving, 50 per cent spending, 25 per cent for charity and gift-giving.
Middle childhood (nine - 11 years)
Open a bank savings account and help your child establish a budget and set a savings goal. Introduce the notion of ‘paying yourself first’ by putting away savings as soon as your allowance is paid.
Young teens (12 - 14 years)
Change your child’s allowance from weekly to monthly and help them pinpoint long-range goals such as a trip, so they can start longer-term saving and find new ways to increase their saving.
Teenage (15 - 18 years)
Discuss mutual expectations about university costs and identify what they can help fund and set goals. Don’t pay for everything, so they can experience the pride of contributing.
Young adulthood (19 - 22 years)
Discuss post-graduation plans and future life goals, quantify expenses such as first apartment, work wardrobe, holidays and help them continue to save towards these goals.
* JP Morgan Private Bank
The Bio
Favourite vegetable: “I really like the taste of the beetroot, the potatoes and the eggplant we are producing.”
Holiday destination: “I like Paris very much, it’s a city very close to my heart.”
Book: “Das Kapital, by Karl Marx. I am not a communist, but there are a lot of lessons for the capitalist system, if you let it get out of control, and humanity.”
Musician: “I like very much Fairuz, the Lebanese singer, and the other is Umm Kulthum. Fairuz is for listening to in the morning, Umm Kulthum for the night.”
'Worse than a prison sentence'
Marie Byrne, a counsellor who volunteers at the UAE government's mental health crisis helpline, said the ordeal the crew had been through would take time to overcome.
“It was worse than a prison sentence, where at least someone can deal with a set amount of time incarcerated," she said.
“They were living in perpetual mystery as to how their futures would pan out, and what that would be.
“Because of coronavirus, the world is very different now to the one they left, that will also have an impact.
“It will not fully register until they are on dry land. Some have not seen their young children grow up while others will have to rebuild relationships.
“It will be a challenge mentally, and to find other work to support their families as they have been out of circulation for so long. Hopefully they will get the care they need when they get home.”
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
