We can all agree that such a fragmentation would  Page 3 sur 7 generate instability, notably creating the risk of runs from one currency to another. iii Competitive currency devaluations between the two world wars created such instability, when the dollar and the pound were competing for leadership. Fragmentation might also lead to the development of separated payment systems with limited interoperability. And it could harm the GFSN (as reserves could be less convertible) with, consequently, a misallocation of capital. Another current concern is China’s reluctance to join the international community cooperative debt treatment process, the Common Framework. Finally, we all hope that the sanctions and other measures taken in an emergency situation will be withdrawn after a peaceful settlement of the geopolitical situation. In addition to this public – or geopolitical – fragmentation, there is a risk of “private” fragmentation through the disorderly development of crypto-assets, among which the somewhat misnamed “stablecoins”. As demonstrated by the turmoil on financial markets in recent weeks, they are possibly very unstable. We have long stressed the risks of such speculative investments. But it’s not enough: this must be taken as a powerful wake-up-call for a global regulation, which is urgently needed. MiCA on the European side paves the right way. Crypto assets could disrupt the International Financial System if they are not regulated, overseen and interoperable in a consistent and appropriate manner across jurisdictions.
According to SWIFT data, almost 40% of transactions are denominated in euro. It truly is the second most important currency in the world after the dollar. The European Commission has recently taken steps to further strengthen the role of the euro, which are most welcome. iv Among other things, the Commission has launched the Capital Markets Recovery Package that introduced targeted amendments needed to develop euro-denominated derivatives for energy and raw materials. 1. Supplying euro denominated safe assets and enhancing Capital Markets Union An international currency is only as strong as the safe assets it can offer. The euro sovereign debt market is still fragmented and only a few Member States are issuing global assets in a sufficient quantity. In this regard, there have been interesting recent developments in Europe. In June 2021, Europe launched Next Generation EU (NGEU) which will raise over 800 billion euros through a joint issue of European bonds. More broadly, the deepening of European Capital Markets Union should, at end, be instrumental. v It would help both for the allocation of capital within the euro area and for the stability and balance of the International Financial System. Such an initiative is important as we face new policy challenges. The transition to a greener economy will require immense financing, and the digital transformation will also require both public and private investments. This all calls for investments in global public goods to be increasingly managed at the EU level. Two open questions remain.