What are the least stable world currencies

The dream of the world currency

The currency union has barely been stable again when Brussels is working to put the euro in the race against the dollar. The instruments available for this are, of course, limited.

Brussels / Vienna. A historic window of time has opened in which Europe can score: The protectionist, introverted economic course of the US government under Donald Trump makes it easier for the EU to gain ground internationally. On the one hand, this is already happening with a large number of new commercial contracts. On the other hand, the EU Commission now wants to win the race between the dollar and the euro. On Wednesday, she presented measures to strengthen the international significance of the single currency.

If the euro succeeds in placing the euro as the world's number one currency, the 19 participating countries in particular would have advantages. For them, there would be no exchange rate risk in many international transactions, which would bring lower costs and more reliability. The EU Commission argues that a relatively stable currency like the euro would also have a positive impact on the international financial system.

The euro is already the second most important currency in the world after the dollar. Around 36 percent of global payments are made in the common currency (dollar: 40 percent). A total of 60 countries have pegged their national currency to the euro. In Montenegro it is now the only relevant means of payment. In the currency reserves held by national central banks, the euro, at 20 percent, is well behind the dollar at 60 percent.

And the dollar continues to dominate one of the most relevant international sectors: energy. According to the responsible EU Commissioner, Arias Cañete, the EU imports energy worth EUR 300 billion annually. However, 80 percent of the oil and gas deliveries are billed in dollars. And this is where the Commission wants to start in the next few months: It will discuss a strategy for strengthening the euro in the energy sector with market participants and interest groups. For example, the common currency should be used consciously where the EU company can decide for itself - for example in international investments in the energy sector. Current guide values ​​for crude oil etc. should in future - if possible - be shown in euros. The aim is that ultimately most deliveries are billed in euros.

Hope for sovereignty

The procedure is similar for other raw materials such as metals. Last but not least, the Commission is also planning to convert payments to the euro in the international food trade. There is also a lot of catching up to do in the handling of business in the transport industry (aircraft, ships, railways). Here, too, the dollar has dominated so far. However, the political leeway for promoting the euro is limited. The EU Commission cannot order the settlement of international transactions in a certain currency.

In his State of the Union address in September, Commission President Jean-Claude Juncker described the euro as a tool for a new European sovereignty. Indeed, if the euro established itself as the world's most important currency, it would reduce the risks of external shocks for European companies. The most important prerequisite for global use of the euro, however, remains its stability. After overcoming a difficult phase during the Greek crisis, stricter rules were adopted for all participating states, but Italy recently broke out of this corset again out of national interests.

("Die Presse", print edition, December 6th, 2018)