EU sets out plans to limit US dollar reliance, boost euro

London

THE European Union has set out plans to strengthen the international role of the euro, as its seeks to erode the dominance on the US dollar and lessen the bloc's vulnerability to financial risks, including US sanctions.

The plan includes measures to help protect against currency shocks, and allow greater scrutiny of foreign takeovers, according to a draft of the proposal obtained by Bloomberg. The plan to foster "openness, strength and resilience", was earlier reported by The Financial Times.

"The extra-territorial application of unilateral sanctions by third countries has seriously affected the EU's and its member states' ability to advance foreign policy objectives, to honour international agreements and to manage bilateral relations with sanctioned countries," the document says. "At times, unilateral actions by third countries have compromised legitimate trade and investment of EU businesses with other countries."

US President Donald Trump has imposed a slew of sanctions on individuals and countries including China, Iran, Russia, North Korea and Venezuela that have affected companies and payment services across the globe. The US has also pressured EU nations to abandon an alternative payment system meant to shield European trade with Iran from American sanctions.

In the case of China, tensions have escalated with America's latest move to delist three Chinese companies from the New York Stock Exchange and the blacklisting of Xiaomi Corp, a smartphone maker.

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The proposals come as the European Union seeks to better protect its foreign policy and strategic interests, especially amid the coronavirus pandemic, which roiled global markets and sapped economic growth. The document highlighted that falling valuations of European stocks raised the risk of some strategic firms being taken over, with the loss of technological expertise at stake.

The document is set to be adopted by the European Commission on Jan 19, the day before US president-elect Joe Biden's inauguration. The draft seen by Bloomberg is not final and its contents could still change before its adoption. BLOOMBERG