Frustrated by unilateral US sanctions under the Trump administration, the European Commission is reportedly working on a plan to assert financial and economic autonomy and limit the bloc’s dependence on the greenback.
In a policy document expected to be adopted as early as next week, EU officials stressed that “Global financial markets are too dependent on the US dollar”, the Financial Times reported on Saturday citing the document.
Given the lessons of the pandemic, Brussels is instead looking for ways to strengthen the euro’s global positions. The wider use of the single European currency in financial markets may “Protect the economy from currency shocks”, ensure the resilience of the international monetary system and make the world economy less vulnerable, according to the project. Measures to promote the euro could include revising European regulations on financial benchmarks, encouraging them to be denominated in euros rather than dollars, among other measures.
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The rule can still be changed before its official release scheduled for Tuesday, just a day before the inauguration of US President-elect Joe Biden. While EU officials had earlier said they hoped for cooperation with the new US administration, the plan signals they were preparing for at least the worst.
The document underlines that Brussels is concerned about its “vulnerability” US extraterritorial economic restrictions, as seen in the situation with Iran after Washington abandoned the multilateral nuclear deal and reimposed sanctions against the Islamic Republic. In an attempt to salvage the deal, officially known as the Joint Comprehensive Plan of Action (JCPOA), the EU had to develop a special financial mechanism to facilitate trade with Tehran.
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“The EU should develop measures to protect EU operators in the event that a third country obliges EU-based financial market infrastructures to comply with its unilaterally adopted sanctions”, the policy document says.
Other measures proposed include strengthening the Union’s self-sufficiency in a number of sectors, including finance, and tightening up the policy on foreign takeovers.
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