On his first official visit to Chile, the European Commissioner for Budget and Administration, Johannes Hahn, will deepen relations between the two partners in the financial sphere

On his first official visit to Chile, the European Commissioner for Budget and Administration, Johannes Hahn, will deepen relations between the two partners in the financial sphere

The first official visit to Chile of the European Commission's Commissioner for Budget and Administration, Johannes Hahn, takes place in a context of deepening of the bilateral relationship between Chile and the European Union, especially after the signing of a new Advanced Framework Agreement in December 2023, which is currently in the process of ratification in the Chilean Congress.

The main purpose of the Commissioner's visit to Chile and Latin America, as he will also visit Brazil and Peru, is to present Eurobonds (EU public debt financial instruments), as a suitable and safe investment alternative for Chile, as well as to promote the internationalization of the Euro as a global currency.

With this in mind, the Commissioner will hold meetings with the Minister of Finance, Mario Marcel, and the President of the Central Bank of Chile, Rosanna Costa, including the staff that manages the investments of the Bank's international reserves and the Chilean Treasury's sovereign wealth funds. The Commissioner for Budget and Finance will also meet with the Acting Minister of Foreign Affairs, Gloria de la Fuente, and with relevant actors from the financial market along with, banking and private sector institutions and associations.

BACKGROUND

The European Union has become a major player in the financial market, issuing highly rated bonds to crowdfund EU policies such as the green and digital economy for the EU's recovery and resilience, as well as externally, providing liquidity support to Ukraine. To this end, the EU issues on average approximately EUR 150 billion per year, which will make the EU one of the largest issuers of euro-denominated financial instruments. With more than 20 years of existence, the euro has become a global currency with a stable exchange rate against other currencies such as the Chilean peso and the US dollar.

EU issues benefit from the high credit rating of the European Union.

The European Commission is empowered by EU Treaties to borrow from international capital markets on behalf of the European Union. It is a well-established name in the debt securities markets, with a strong track record of successful bond issues over the past 40 years, which have intensified in recent years. All EU bond issues executed by the European Commission are denominated exclusively in euro.

The European Commission uses the profits from Eurobond issues to fund EU policy programs. A landmark policy program currently funded by EU-Bonds is the green and digital recovery instrument, NextGenerationEU, under which the EU is expected to raise up to €712 billion (out of a maximum program envelope of €806.9 billion) by 2026.

By issuing up to 30% of all NextGenerationEU funds in the form of green bonds, the Commission expects to become the largest green bond issuer in the world.

The EU also issues EU bonds to finance loans to Ukraine. Under the Ukraine Facility, the EU will raise up to €33 billion in EU bonds between 2024 and 2027 to finance these loans.

The Commission communicates its planned financing volumes to the market through semi-annual financing plans covering the next six months of operations.