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.