EU wants to rely less on US dollar

2021-01-18 12:04:37

Signage for Portugal's presidency of the EU Council goes up in Brussels on Monday. XINHUA After enduring uncertainty and financial damage at the hands of President Donald Trump, the European Union wants to end its dependency on the United States' dollar. The bloc has come to believe global markets are too reliant on the currency, and therefore too vulnerable to US sanctions, the Financial Times newspaper has reported. The FT said it has seen a draft European Commission policy paper that shows just how frustrated Brussels has become with Trump's policies, which have forced the bloc to confront the dominance of the dollar. The policy paper reportedly expresses concern that the EU was not able to break ranks with the US on the issue of sanctions against Iran, and says Brussels needs the ability to "shield" itself in future from "the effects of unlawful extraterritorial application" of such measures. Washington's sanctions against Iran meant the EU could no longer use traditional channels to make payments to Iran for legitimate trading, and that it had to set up a new system to facilitate such exchanges. The Financial Times quoted an unnamed European Commission official as saying: "The Trump years highlighted our vulnerabilities, and we need to address those, even if he's gone. It's about the EU's place in the world – having the means to be an economic and financial power commensurate with our size." The policy paper reportedly says: "The EU should develop measures to shield EU operators in the event a third country compels EU-based financial-market infrastructures to comply with its unilaterally adopted sanctions." The paper said the Trump administration turned its back on transatlantic norms in recent years, which highlighted the need for less dependence on the dollar and a higher profile for the euro. It says: "global financial markets are too reliant on the US dollar to cushion financial tensions and stability risks". The policy paper says a stronger global role for the euro would "shield the economy from foreign exchange shocks and reduce reliance on other currencies". It says more alternatives to the dollar would lead to greater resilience of the international monetary system and more choice for market operators, which would make the "global economy less vulnerable". Sputnik International, the Russian state-owned news agency, noted that the EU began pushing for more use of the euro in 2018. Ironically, the document will be discussed and likely adopted by the European Commission on the eve of Joe Biden being sworn in as the next US president on Wednesday, meaning he will be left to deal with fallout from the Trump years. The EU is at the same time vowing a new era of cooperation with the US following the very difficult Trump years. The Bloomberg news agency said the draft policy paper will likely be further augmented in future.