What ‘Changes’ Are Being Prepared for the Euro and How Dangerous Could They Become?

It’s no longer a secret that in Frankfurt, as well as Luxembourg, the idea of strengthening the euro’s role in international markets—essentially positioning it as a potential substitute for the dollar, within Washington’s tolerance limits—has become a topic of serious discussions and planning. The growing skepticism about the security the dollar can offer to global investments, due to Trump’s economic and trade reset, has created expansion opportunities for the euro’s international role that didn’t previously exist. Recent developments since April 2, highlighted by IIF data published during the IMF Spring Meeting in Washington, show this “opportunity” for the euro becoming visible. Consequently, the euro’s appreciation against the dollar is now a strong element of the new reality. What are they saying in Frankfurt? According to statements like those from Dutch Central Banker Klaus Knot, one of the hawks at the ECB, the chance for the euro to take on an international role is now on the horizon. However, certain prerequisites must be met for this to proceed. These all converge on overcoming what still divides the EU into 27 separate interests and economies. For instance, completing the internal single product market, unifying the European capital market, finalizing the single deposit guarantee, expanding the single European bond market (Eurobonds), and ultimately further harmonizing fiscal policy across the 27 member states. Additionally, accelerating the issuance of the digital Euro. In essence, surpassing the major existing barriers to effectively eliminating internal economic borders among the 27 EU member states or at least the Eurozone countries. How will convergence happen? Just mentioning these prerequisites could make one think the conversation about a new international role for the euro is meaningless unless such barriers are overcome. The truth, however, is that for this discussion to open up in Frankfurt and for these conditions to be clearly placed on the table, something is already moving behind the scenes where the next day of monetary policy in the EU is being played out. To understand the depth and breadth of expectations behind this discussion, we consulted old acquaintances from Brussels and Frankfurt dating back to the days of the European Monetary Union’s formation. There, we were advised to pay closer attention to the persistent and puzzling pro-war stance of the EU regarding the war in Ukraine, as well as emerging conflicts between the Commission and the legal services of the European Parliament over the legality of the controversial €800 billion rearmament plan against Russia. ‘To make such a big step towards European integration, something we failed to achieve with political and economic means, requires a significant external enemy—a threat so dangerous that it forces internal cohesion and overcomes national obstacles keeping Europe fragmented. And not everyone needs to unite; remember, integrating two speeds was always an option,’ said a former high-ranking official at the Commission, still influential in Europe’s economic and political landscape. From this perspective, von der Leyen’s repeated statements that Russia remains a threat to Europe, despite impending peace in Ukraine, sound different—not just as incomprehensible exaggerations but also dangerously calculated.