European Union finance ministers will meet on February 16 to discuss plans to launch a euro-backed stablecoin and expand common debt, in an effort to counter the dominance of the US dollar, as the euro accounts for only 20% of global reserves.
The European Commission has prepared a strategic document warning that the global financial system is being “weaponized,” calling on the EU to act immediately to protect its economic and financial capacity. The document emphasizes the need for the EU to strengthen its economic security against the increasing risks posed by the use of international monetary instruments as geopolitical weapons.
In reality, the euro currently accounts for only about 20% of global currency reserves, while the USD holds as much as 60%. This imbalance is further exacerbated in the digital finance sector, where USD-backed stablecoins like USDT and USDC dominate almost the entire market, while euro stablecoins account for less than 1%. This gap not only puts pressure on credibility but also creates the risk of continuous Capital outflows from Europe to the US, weakening the value of European assets.
To reverse this trend, the European Commission proposed a significant expansion of the euro-denominated digital asset market. The plan included the introduction of stablecoins, Tokenize deposits, and central bank digital currencies (CBDCs), all backed by euros. Simultaneously, governments were advised to address the risks posed by foreign currency Peg stablecoins, particularly the USD, to prevent further penetration of the greenback into the European financial ecosystem.
Expanding the overall debt and reducing payment dependence.
The Commission also called for a significant increase in the size of the EU's common debt issuance to finance projects with clear added value for the entire bloc. Currently, the EU has only about €1 trillion in common debt, a figure that contrasts sharply with the US Treasury bond market worth around $27 trillion. This limited liquidation makes EU bonds less attractive to large institutional investors, although there is high market demand for EU AAA-rated bonds.
However, the plan to expand the common debt remains hampered by some member states, such as Germany. To overcome this, the Commission hopes to persuade countries and businesses outside the euro area to issue debt in euros, thereby increasing the size and liquidation of the euro bond market.
The document also proposes reducing the dominant Vai of Visa and Mastercard in the EU payment system. The goal is to build a completely independent, EU-operated payment system, eliminating dependence on US fintech companies for critical payment infrastructure.
The Commission recommends that all foreign aid and loans to countries outside the EU should be settled in euros, including transactions involving oil, gas, weapons, and industrial goods. Businesses are also encouraged to invoice in euros in international trade, particularly in strategic sectors, in order to increase the proportion of euros used in cross-border payments.
To keep Capital flowing internally, the Commission proposed harmonizing investment, tax, transaction and supervisory laws across the EU. The Commission estimated that nearly €10 trillion is currently held in savings accounts across the bloc, and with a smoother legal framework, a significant portion of this could be channeled into European business investment.
Another key proposal is to transform the European Stability Mechanism, worth around €500 billion, from a bailout fund into a formal EU institution. This would allow it to manage the entire EU debt issuance process as a single EU debt authority, rather than serving only eurozone countries.
The European Central Bank is also actively involved in this process. According to three anonymous sources cited by Reuters, the ECB is developing new liquidation agreements with other countries to expand the global use of the euro. ECB President Christine Lagarde confirmed that the central bank will present EU leaders with a list of “important reforms” to boost growth and maintain competitiveness, including a tool to “unleash the potential of European human resources.”
From stablecoins to common debt, from payment systems to savings mobilization, the entire strategy is geared towards a single goal: reducing Europe's dependence on the USD and reaffirming the euro's position in the global financial architecture.
