Earlier in the week, we looked at what the International Monetary Fund (IMF) believes Europe should be doing to solve the Eurozone crisis. Nemat Shafik, the Deputy Managing Director of the IMF, set out a series of policy suggestions for the Eurozone that the IMF believes might finally calm markets and solve the crisis. The IMF’s advice is, essentially, to improve coordination and cooperation at the European level and deepen fiscal integration. In short: “more Europe”.
Is this advice shared by other international organisations? We asked Angel Gurría, Secretary General of the Organisation for Economic Co-operation and Development (OECD), what his organisation thought about the calls from some of our commenters to scrap the Euro:
The sovereign debt crisis is not a eurozone crisis. It is the crisis of some countries in the eurozone. The euro has worked well in many ways during the global crisis. It’s a huge achievement. But, the crisis has shown the necessity to adapt national economies to the reality of monetary union. Many countries rested on their laurels and experienced a gradual loss of competitiveness in the run-up to the crisis. Reforms, going beyond those currently planned, are needed to improve fiscal, financial and structural performance. This includes a proper balance between fiscal, structural but also social and employment policy measures.
Pier Carlo Padoan, Chief Economist of the OECD, was even more pointed in spelling out the OECD’s recommendations:
The eurozone crisis has shown that much more needs to be done in strengthening governance of the euro area along two lines: first, improving the resilience of the private sector so as to avoid the build-up of unsustainable imbalances. Second, making progress in fiscal integration.
So, both the IMF and the OECD are pushing for greater fiscal integration and “more Europe” as a solution to the eurozone crisis. The specifics of that integration are vague (though the British Chancellor of the Exchequer has, for example, recently been pushing for the adoption of eurobonds) but more and more people are starting to argue that stronger fiscal integration is the only way out of the crisis.
Vote 2014
Voting is closed in our Debating Europe Vote 2014! The results are now in, so come and see what our readers thought!
2 comments Post a commentcomment
Euro born as a debt because it’s lend from the bankers.
This is the only truth.
You can hide the truth for a while not forever
We should give it a serious thought as it might not be such a bad idea to adopt a little bit of a “Fortress Europe” mind set. The framework is in place to take a calculated risk and a courageous step forward towards elevating Europe’s power and reputation. We have a democratic elected parliament, a president, a foreign policy representative, a well structured commission hungry to be more efficient and functional, and we have a big crisis on hand which could be the substrate as well as a reason to think and act out of the box. So, why doesn’t the OECD think out of the box and be more open to alternative studies and recommendations. Rather then bowing to the members national interests, challenge them with models for the future. Why not introduce a controlled default of Greece and let the EU parliament take over and manage a reform at the expense of it’s sovereignty and at the benefit of the citizens. Study the impact of allowing weaker countries with high debt and/or regions that want more local autonomy to exchange sovereign debt for the transfer of federal powers to the EU parliament and institutions and hence start the process of sovereign mitigation to a truly European sovereignty. Once this is done we will still only represent less than 10% of the world’s population, however be recognised as a united powerhouse with lots to offer. One currency, one set of common rules and regulations, one EU monetary fund grouping all sovereign debt, one tax matrix, a Eurobond, one security and defence policy and mechanism, etc. but dozens of cultures, languages, political platforms, freedom and internal peace. The Euro can be a strong alternative to the dollar and muscle the Chinese. And indeed, I remain stuck with the question: “What does the OECD really recommend or are they afraid to embarrass their member states???”