The EU has Developed a Plan to Abandon the Dollar
OREANDA-NEWS The European Commission (EU Executive body) on Wednesday, 5 December published a plan to strengthen the global role of the Euro. Brussels wants to make the Euro more attractive in international settlements and in the global financial system, to expand the use of the European currency in the oil and gas markets and in strategic industries (in particular in the aircraft industry).
"The time has come for the Euro to develop its global role. The Euro should reflect the political, economic and financial weight of the Eurozone and maintain a balanced, rules-based international political and economic order" Valdis Dombrovskis, Vice-President of the European Commission for the Euro and social dialogue said. This was published in Commission press release.
The published policy documents do not explicitly mention the need to break the global hegemony of the dollar, but this is implied. "European companies still trade in US dollars in key strategic markets, often even if they trade with each other. This exposes business to currency risks and political risks, such as unilateral decisions that directly affect dollar transactions," the European Commission said, hinting at the actions of the Donald trump administration that harm Europe's business interests.
The European economy is quite comparable to the US in scale and complexity, but the Euro remains on the sidelines. The Eurozone's annual GDP at purchasing power parity in 2017 was $14.9 trillion, and the US $19.4 trillion (World Bank estimates), but the dollar plays an incomparably greater role.
The dollar has historically enjoyed the "exorbitant privilege" of the world reserve currency (as French President Valerie Giscard d'estaing put it in the 1970s).
The dollar's share in the global currency reserves of Central banks is 62% against only 20% of the Euro.
The dollar is a natural choice for trading between non-US companies due to the high liquidity of the dollar and the minimal cost of its use.
About 85% of energy imports to the EU are paid in dollars.
Bizarre politics Trump (reimbursement of import duties against European products, unilateral sanctions against trading partners, the EU.) is forcing the Europeans to think about their economic sovereignty. "The trigger is the increasing politicization of the dollar and the use of sanctions," says at the European analytical center.