The idea of ââpromoting the euro as a tool of power has made a comeback with Donald Trump in the White House.
When Trump abandoned the nuclear deal with Tehran, European companies that had rushed to invest in Iran found themselves under threat of US retaliation.
The EU rushed to put in place a legal workaround to keep European businesses out of Washington’s sights, but the effort failed as businesses shuddered at the cost of defying the United States and the long reach of the US dollar.
Stung, European leaders ordered the European Commission to work on ways to counter this militarization of the dollar.
The January committee presented some ideas, but no legislative proposal.
A European official familiar with the debate said that since Trump left, the issue had lost momentum.
And anyway, “when you talk about the international role of the euro, you’re talking about everything and nothing at the same time,” the official said.
“Everyone agrees with the principle of having a bigger role for the euro in the world, but where disagreements arise is how you get there.” Most agree that the missing magic ingredient is a safe asset, a euro equivalent to the US Treasury bill which, since World War II, has been the haven for the global investor in stormy markets.
The huge demand for euro-denominated bonds to help pay off the bloc’s massive stimulus fund to rebound from the Covid-19 pandemic has only fueled the argument.
But the creation of a Eurobond equivalent to the American T-Bill has long been a refusal for the richest member states like Germany or the Netherlands who fear to repay loans which benefit France, Spain or the United Kingdom. Greece, a heavily indebted country.
Mr Wolff, of the Bruegel Institute, said that a Eurobond “would certainly help things”. But what would work even better for the euro, he said, is a productive economy.
âIf you have a vibrant economy, international investments will come to Europe and that will strengthen the euro as a currency,â he said.