The US dollar is still by far the most important currency worldwide. For example, the prices of many commodities are in dollars. The power of the dollar also ensures that the US has power in the world.
This became apparent when the US unilaterally imposed sanctions on Iran under President Trump. These had consequences for the financial infrastructure in Europe, such as the Swift payment system, which regulates international financial transactions.
In order to be able to trade with Iran, the EU had to set up a separate system to continue making payments possible.
‘Weakness of Europe’
The draft policy document of the European Commission states that the EU must protect European companies and institutions against such situations as a result of actions by ‘third countries’, according to the Financial Times, which says it has seen the plan.
“The Trump years have exposed our weaknesses and we need to address them even when he’s gone,” a committee official told the paper. “It’s about the EU’s place in the world, to be an economic and financial power with an influence appropriate to our size.”
The plans come at a remarkable time: in four days, the new president of the US, Joe Biden, will be inaugurated. He is expected to want to cooperate more with allies, such as the EU.
Use Euro more often
The EU also wants the euro to be used more often in financial markets. This makes European markets and companies less vulnerable to dollar exchange rate fluctuations. It would also make the international monetary system ‘more resilient and stable’.
Since the end of the Second World War, the US dollar has been the most important currency in the world. In 2018, more than half of the goods imported by the EU were billed in dollars.
The policy document, to be adopted next week, also states that the EU should become less dependent on the financial infrastructure of the United Kingdom. The Committee mainly refers to clearinghouses, which settle transactions on the stock exchange.
Now that Brexit is a fact, the EU must also become independent in it, the committee believes.