ALPBACH, Austria, Aug 31 (Reuters) - Euro zone countriesneed to increase efforts to establish a single capital market todefend their interests and counter the dominance of the U.S.dollar, a veteran European Central Bank policymaker said.
"The economic policy of the United States is currently oneof the substantial risks to the global economy," Austriancentral bank governor Ewald Nowotny told journalists at aneconomic forum in Alpbach, Austria.
He said an unpredictable trade and economic policy, biasedrulings in U.S. courts and the dominant role of the U.S.currency were bad for Europe and must be met with measures thatstrengthen the euro.
"The (U.S. dollar's) role is very strong, you shouldn't beunder any illusions," Nowotny said. There was an increasinginterest "to free oneself from a one-sided dominance."
As one example, he listed the European Union's politicalinitiatives to protect its companies from U.S. sanctions onIran. They did not work because the firms' priority was toprotect their businesses, which is why they complied, he said.
"I therefore believe it is very important that we strengthenand intensify the single European capital market project," saidthe policymaker, who also sits on the ECB's Governing Council.
The European credit sector would have a chance to flourishand the common currency could increase its role as a foreignexchange reserve if its liquidity were comparable to that of theU.S. dollar, Nowotny said.
"What is crucial is that the economic foundations are laidstep by step in order to achieve a certain degree of de factoindependence."
(Reporting by Kirsti Knolle; Editing by Peter Cooney)
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