Abstract We show first that the dominance of the dollar as the world currency is bound to decline. Second, there is no other currency today capable of taking over the dollar. The euro is handicapped by a fast decline of the economic importance of the euro area countries in the world. Even a Capital Markets Union will not compensate this, because a Capital Markets Union by itself does not create a safe asset. The latter is necessary as a benchmark to price the myriad of financial assets that make capital markets interesting for investors. Only a political union in which a federal European government has the authority to issue a common debt can achieve this. The most likely scenario, therefore, is that the world monetary system develops into a multi-polar currency system, where a limited number of currencies achieve a strong regional importance without any of them achieving the status of the dominant currency, in a way that the dollar has done in the post-war period. That seems to be the future for the euro, a future that can become a reality faster by developing a euro payment system alternative to the dollar and by creating a full-fledged digital euro.
Abstract Schumpeterian growth creates by destroying. A critical financial consequence arises when capital rendered obsolete by innovation also serves as collateral for debt that markets treat as safe. Using the AI infrastructure boom as a case study, this paper documents the scale of investment, the spread of asset-backed and structured finance, and the emergence of investment-grade claims backed by data centres, GPUs, leases, and customer contracts that are increasingly reaching the portfolios of institutional investors. Systemic risk arises not from technological depreciation itself, but from a common collateral revaluation that transforms widely held, information-insensitive claims into information-sensitive ones. Such a shift can trigger screening, abrupt repricing, deleveraging, and fire sales across institutional portfolios. The mechanism echoes a central lesson of the Global Financial Crisis and carries implications for financial supervision, risk assessment, and complementary industrial policy.
Abstract The EU Capital Markets Union initiative is supposed to further integrate and strengthen European capital markets. However, the Commission’s current agenda fails to harmonize the national markets on one competitive framework. Instead, the Taxonomy Regulation adds a new layer of rules on top of the existing barriers. The proposal of a common safe asset – a frequent demand in the context of the Capital Markets Union – would weaken member states’ willingness to address structural problems through comprehensive market reforms. Consequently, the current agenda further harms the attractiveness of European capital markets instead of improving them. A genuine Capital Markets Union would require the EU to abandon its path of top-down harmonization and allow competition among national frameworks to determine the best rules.
Abstract Switzerland’s success rests on strong institutions, direct democracy, federalism, a market-based economic order, and a collegial multi-party government. These mechanisms have helped a highly diverse country manage conflict through compromise, minority inclusion, and broad civic participation. At the same time, Switzerland’s model is under pressure from polarization, reform gridlock, weakened federalism, globalization, media-driven politics, and declining commitment to compromise. Switzerland must renew its political culture, strengthen civic responsibility, protect economic freedom, and preserve the institutions to keep the country stable and prosperous.
