Delphi Forum – Klaus Regling: Europe’s greater unification strengthens the euro

Initiatives for greater European integration are strengthening the international role of the euro, said Klaus Regling, head of the European Stability Mechanism (ESM), in a discussion at the Delphi Economic Forum.

An international financial system based on several almost identical currencies will be more efficient for the global economy than the dollar-dominated world today, the ESM chief said. He said in particular that emerging economies were negatively affected by expectations of a tightening of Fed (US central bank) policy, whereas if there were more currencies of the same importance this would not be the case.

The difference between the euro and the dollar is narrowing, he said, adding that 50 countries are linked to the common currency.

The euro, he noted, will become more attractive to international investors with the increase in common EU debt issues, such as those for the SURE employment support program and the Recovery Fund, which will boost their size to to 2 trillion euros.

He also referred to the banking union process, which will strengthen the European economy, making it more attractive to investors. The banking union, he added, started years ago and two of its three stages have already been completed.

The third stage, he said, concerns difficult and politically sensitive issues, such as the European Deposit Insurance Scheme (EDIS), which will take some years to complete. He also noted that the initiative for the unification of the EU capital markets is underway.