The recent Euro at Risk on EU Digital Sovereignty stance by the European Union, combined with the US Federal Reserve's Stimulus Plan, has sent the market into a tailspin, with the EUR/USD in a freefall and the EUR/JPY nearing a bearish outlook. Meanwhile, European officials have warned of further action should the Euro's values continue to decline, as well as if economic conditions do not improve. On top of this, European Parliament has now called for an emergency meeting of all 27 EU nations, to discuss the crisis.
But why is there such an immediate response from the EU? While the European Commission and the European Parliament both claim that the Euro's values are not negotiable, a closer examination of their argument may point to a different motivation.
Digital single market rules, like those of the US, Australia, Canada, Japan and South Korea, which allows each member nation to enact its own national legislation to enact consumer protection and privacy laws. The European Union has tried unsuccessfully to adopt such rules. For this reason, European officials have been urging other members of the EU to adopt similar rules to protect citizens and privacy of internet users.
Digital single market rules also include the right to regulate Internet access, to promote online competition, to promote online investment, to promote online education, to promote online employment, to promote online shopping, to provide online public services, and to protect intellectual property. But, it is not enough to simply state the intent of these regulations. The EU has consistently failed to enforce its rules, despite calling for EU members to do so, despite passing a wide variety of controversial "anti-trust" and copyright act. The Commission has also failed to bring legal action against those companies that are found to be abusing their dominant position in the sector.
As one example, the EU's rules on the right to privacy were first passed in 2020 but the Commission has failed to enforce them. Why? It seems that the Commission was afraid to enforce them, because it would have caused a new wave of regulation for businesses that had already started to implement them. As a result, businesses have been able to bypass the system, without being hindered.
In addition, the EU's rules on the right to privacy are no longer valid if businesses are based in a third country. This has led to some governments, making it a policy not to require a business to operate in their country if they can legally do so from another country. Such a policy may not seem fair to citizens in EU countries where people have been targeted for crimes committed on the internet or for free. It may also open up more problems to the EU.
When compared with the US Federal Stimulus Plan, the EU's stance towards its currency is perhaps surprising. Yet, the EU is still in the process of formulating the banking sector and has indicated that it will continue to do so. While it is true that the European Central Bank has taken a more proactive stance toward stimulating the economy, the fact that the EU is still not ready to pass its own banking laws is also troubling.
With the United States, the European Union's position is still lagging behind, but it may be due to the fact that the European Central Bank's actions are not enough to stimulate the economy to the same degree as the Obama Stimulus Plan. However, if the EU fails to come to terms with the challenges posed by the crisis, it may prove to be a serious threat to the future stability of the European Union, especially with the possibility that the EU will break apart.