ONLY closer government ties and a limited system of financial transfers can help the Eurozone move past its current crisis and focus on long-term competitiveness, the European Central bank’s (ECB) Benoît Cœuré said yesterday.
“In order to restore confidence, policymakers in the euro area need to resolutely push ahead with fiscal consolidation, structural reforms to enhance competitiveness and European institution-building,” said Cœuré.
“A centralised fiscal capacity could be considered too, provided it is not the basis for permanent transfers but is used to promote market integration and better resilience to economic shocks. For instance, a Eurozone unemployment insurance scheme could be set up, which would support much-needed cross-country labour mobility.”
Meanwhile former central banker Athanasios Orphanides said the Eurozone could break up if the proposed banking union is not implemented.
The European Commission unveiled sweeping plans for the ECB to supervise all Eurozone banks last week as a first step toward a banking union.