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In my attempt to demonstrate the close connexion between these two matters and the dead end to which one is led by separating them, I will first refer to the last sentence of the excellent article by Pierre Defraigne in the Libre Belgique of July 25th:
“But the EU can only fulfil its historic role of a budding global power by endowing itself with a truly international reserve currency, a condition for its internal solidarity and coherence, and with a common defence, condition of its strategic autonomy.”
I wish also to draw attention to the negotiating paper adopted recently at Chequers by the British Government. It suggests establishing a regime of “enhanced equivalency” between the rules governing the EU and British Financial Services market.
The proposed “enhancements” concern two main points: first to limit the ability of the EU to terminate the regime unilaterally on 30 days’ notice; secondly to subject the adoption of any new rules (they are initially identical) or amendments to them, to a bilateral negotiating procedure.
From the British standpoint, this proposal is based on the preponderant role of the City as a financial centre and of the interest that the EU should have to enjoy unfettered access to its services. It also, incidentally, comforts the strong contribution made by financial services to the country’s balance of payments
From the EU’s point of view, it is clear that it is in the interest of economic activity to preserve the important advantages, including costs and competence, of an easy access to the City’s services. Conversely, the responsibilities of the Authorities in terms of “financial stability” for the Eurozone prohibits any form of sharing of sovereignty, concerning financial policy or regulation, with a third party.
It is also worthy to note that nowhere in the British proposals can one find any reference to “equivalence” in the granting of rights to the EU over the UK financial markets and in particular over monetary policy. The latter can exert a major impact as a result of the existing intricate bilateral relations which are precisely the purpose of the current negotiations. It is highly unlikely that the British Government is prepared to confer to the Union an equivalent right of oversight of the UK financial market that it is demanding for itself over the Euromarkets!
Unfortunately, this situation does not permit a compromise solution: if the Union wishes to develop a truly international accepted reserve currency, it cannot allow any limitation to its freedom of action. [...]
The aim of gradually making the € a credible alternative to the USD can only be achieved if the Union has at its disposal all the tools used by the Americans who have transformed their currency into a “weapon of mass destruction”, as I have noted in previous writings. It is only under such circumstances that one could envisage, in due course, neutralising these arms, drawing a parallel with the cold war when the threat of total mutual destruction made the use of nuclear weapons unthinkable. The efforts (and sacrifices) that the EU must be ready to shoulder will be considerable, especially if they are increased by efforts in the field of defence, which, as pointed out by Pierre Defraigne, are necessary to ensure its strategic independence.
Within such a context, there can be no question of sharing the slightest sliver of monetary sovereignty with a third party which, if granted, would totally undermine the EU’s credibility and ensure the long term submission of its Member States to the dictates of American policy. [...]
Full article on Paul N. Goldschmidt website