Europe has big plans to raise the profile of the euro on the global stage.
The European Commission is pushing to give the currency more importance in international trade, providing an alternative to the dominant US dollar.
“It’s a question of choice,” said Kerstin Jorna, the Commission’s deputy director-general in charge of economic and financial affairs.
“[International transactions and settlements are] very much dominated by one currency … Is that a good thing to have only one currency? Or, should we not be looking to [a system that] is more resilient and based on different currencies, which actually provides economic operators with an opportunity, a choice,” she said this week during a special one-to-one video interview with Yahoo Finance UK at the World Economic Forum (WEF) in Davos, Switzerland.
The European Commission is set to launch consultations in the coming months about this initiative. It plans to explore the possibility of using the euro for purchasing commodities like oil, which are almost exclusively priced in US dollars.
“I think we should look at those who are buying energy. Why do you have to pay in one currency only?” said Jorna, noting that it seemed unfair that European businesses had extra costs related to currency hedging and currency exchange.
The euro is used by 340 million people in 19 European countries, including Germany, France, Greece and Spain. For comparison’s sake, the US dollar is used by roughly 330 million Americans.
Jorna said that encouraging the use of euros in global markets could be a good thing for Europeans and the world.
“I think it would be a good thing for European companies. But it would probably also be a good thing for the global economy if there was not only one single currency, but a choice between several lead currencies. And I think that after 20 years, the euro has shown we have the guts to do it,” she said.
The euro was first launched in 1999.
A stronger euro also serves another purpose: It gives European businesses a potential way to bypass harsh US sanctions that are designed to stop them from trading with countries like Iran.
America’s reintroduction of sanctions on Iran in November forced European companies to withdraw business from the country for fear of legal action and punishment by US authorities.