The European Union needs a “master plan” to move euro financial services from London to the bloc if it wants to expand the single currency’s role in a global economy dominated by the US dollar, a senior EU lawmaker said on Monday.

Markus Ferber, a senior member of the European Parliament, said if the EU wants to compete with the greenback, it needs a financial system to match it.

“We need a clear step-by-step master plan that helps key financial sector businesses move from the United Kingdom to the European Union,” Ferber said.

He was speaking ahead of Wednesday’s publication of a European Commission paper on promoting the global role of euro which sets out ways to rely less on the City of London, Europe’s biggest financial centre, after Brexit.

“The Covid-19 crisis has highlighted vulnerabilities in the dollar-dominated international financial system,” the commission paper says.

“The withdrawal of the United Kingdom from the EU strengthens the need to further deepen the Union’s capital markets.”

The paper recommends better enforcement of EU sanctions, and making EU-based financial market infrastructure less vulnerable to unilateral sanctions from third countries. EU-based securities depositories Clearstream and Euroclear, and messaging services like Swift were affected by President Donald Trump’s actions against Iran.

Euro-denominated trade in debt securities, commodities and other instruments should also be encouraged, the paper said.

Reform of EU “MiFID” securities and benchmark rules should aim to help euro-denominated energy indices emerge, and increase the attractiveness of euro bonds and shares, it said. The EU executive and the European Central Bank will also review policy, legal and technical issues emerging from a possible digital euro.

Published in The Express Tribune, January 19th, 2021.

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