At the beginning of the current year 2021, infections decreased slightly after introducing the vaccination program in the European Union, which helped reduce uncertainty and create a climate of economic recovery in global financial markets, according to the latest reports dealing with financial market trends and risks.
The level of pressure in the European financial system, according to the composite index calculated by the European Central Bank, has decreased significantly, reaching early 2020 levels at around 0.0487 points.
On the other hand, financial markets in the US and the Eurozone are recording improvement in trading conditions, according to the indices computed by Bloomberg. Consequently, the global financial market turmoil index calculated by Bank of America Merrill Lynch is heading in a downtrend and below zero value.
Global Financial Markets
The European Commission presented a new strategy to enhance the openness, strength, and flexibility of the global and European economic system and financial markets, based on three pillars:
1- Promoting a more significant international role for the euro by persuading partners in other countries to promote its use; Supporting the development of euro-denominated financial tools and indicators; and improving the status of the international reference currency in the energy and commodity sectors.
The issuance of euro-denominated bonds will add depth and liquidity to the EU capital markets, increasing the euro currency’s attractiveness among investors. Promoting sustainable financing can also develop the European Union’s financial markets, using the euro as a virtual currency for sustainable financial products. The European Commission will also support the European Central Bank in the possible introduction of the digital euro.
2- Developing the infrastructure of financial markets in the European Union and improving their flexibility, including applying extraterritorial sanctions by third countries. In cooperation with the European Central Bank and European Supervisory Authorities (ESA), the European Commission will call on financial market infrastructures to conduct a complete analysis of vulnerabilities related to the illegal extraterritorial application of unilateral measures by third countries and take action to combat such loopholes.
3- Promote the uniform application and enforcement of European Union sanctions. This year, the European Commission will develop a database (Sanctions Information Exchange Repository) to ensure efficient reporting and information sharing between the Member States and the European Commission on implementing and enforcement of sanctions. The European Commission will work with member states to create a single point of contact for cross-border issues related to the implementation and enforcement of sanctions.