22:11 GMT01 March 2021
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    Looking to boost the euro, the European bloc is pinning its hopes on a hefty coronavirus-induced stimulus package and the expected development of a unified digital European currency as part of new post-COVID-19 financial infrastructure.

    The European Union will unveil plans on Tuesday to bolster the euro internationally in a bid to deal with the dominance of the US dollar and insure the bloc doesn't face severe financial risks, such as American sanctions, but demonstrates financial resilience, Bloomberg reported.

    A draft plan to this end outlines the said goals and proposes means to achieve them, including through the development of new markets like green finance, for example.

    Zeroing in on Stimulus Package and Digital Euro

    The European bloc believes its landmark recovery fund, designed to effectively help countries recover from the pandemic-induced crisis, could help boost the euro.

    The stimulus package will provide 750 billion euros ($905 billion) in grants and loans, raised by jointly backed debt, while a third of these funds will have to be spent on green projects.

    "Promoting sustainable finance is an opportunity to develop EU financial markets into a global 'green finance' hub, bolstering the euro as the default currency for the denomination of sustainable financial products", the draft plan said, dwelling on the idea of sustainability.

    Another perceived breakthrough that could also prove to be a game changer in that area is the ECB's push for the introduction and enhancement of a digital euro, the paper has it.

    "Further development of the European digital finance sector will reinforce the EU's open strategic autonomy in financial services and the capacity to protect the EU's financial stability and values", it reads.

    Another circumstance that has created a new reality for the EU is Brexit, and the latter is essentially driving the bloc to update its financial infrastructure accordingly, and pressuring separate companies to move parts of their derivatives-clearing business from London to the EU.

    "We need a clear step-by-step masterplan that helps key financial sector businesses move from the United Kingdom to the European Union", said Markus Ferber, a lawmaker in the European Parliament. "A mere 'wait and see' approach will not do to bolster European financial markets", he noted.

    Washington's JCPOA Exit is to Blame

    Calls to boost the European currency have gained steam of late due to the fallout from Washington's reimposed sanctions on Iran (after President Donald Trump unilaterally pulled the US out of the landmark JCPOA deal with Iran in May 2018) that also aimed to punish European financial institutions, companies, and individuals who went on doing business with the Islamic Republic.

    Washington's powers to enforce international sanctions because of the dollar's hitherto unique status as an international trend-setting currency "has seriously affected the EU's and its member states' ability to advance foreign policy objectives", the draft document says, stressing that America's policies have, at times, "compromised [the] legitimate trade and investment of EU businesses".

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    currency, COVID-19, coronavirus, EU, euro
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