The EU’s Financial Sector Mercantilism Will Lead to Weakness, Not Strength

The best way to have open, strong, and resilient financial markets and payment systems is not to commit to central planning.

Americans don’t give much thought to the European Union. EU elites, however, obsess over America.

Embodying that obsession, European Commission president Ursula von der Leyen’s “geopolitical Commission,” aims to enhance the EU’s role on the world stage, by boosting the importance of the euro — the currency shared by most of its members — along with its capital markets, banks, and payment systems not only within the EU, but beyond it. The Commission (the “EC”) is keen to create EU champions, and to take King Dollar, Anglo-American capital markets, and banks, as well as credit-card networks, such as Mastercard and Visa, down a peg or two. The EC’s January 19th manifesto titled, “The European economic and financial system: fostering openness, strength and resilience,” captures the dirigiste and mercantilist spirit driving its project. Brussels has retail payments and digital-finance strategies, is developing a sustainable-finance strategy, and plans to bolster “the euro as the default currency for the denomination of sustainable financial products.”

The eurocracy’s bias toward dirigisme and its determination to press on with building an “ever closer Europe” show few signs of having been shaken by, say, its mishandling of the procurement and roll-out of COVID-19 vaccines, the repudiation that Brexit represented, or the euro-zone crisis and its aftermath. And then there is the anti-Americanism. Many of the EU’s leadership resent the EU’s dependence on — and the primacy of — the U.S. dollar, banks, payment systems, tech giants, and, if more ambiguously, American hard power.

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