LONDON (MNI) – The European common currency has been a resounding
triumph despite the crisis, European Central Bank Governing Council
member Klaas Knot said Friday.
“The euro is an overwhelming success,” the head of the Dutch
National Bank said at an event here.
The crisis is not a euro crisis per se, but rather “a crisis of
economic policies” of Eurozone member states, reflecting the fact that
“the E of EMU has been relatively underemphasized for too long compared
to the M.”
It is “of vital importance” that the current sovereign debt
problems be resolved, he said.
“EU policy-makers have done a lot to restore confidence in recent
months,” he added, observing the improvement of financial markets. The
Fiscal Compact was one major achievement in the process, he said, but
“there have been major strides also in the area of firewalls.”
Still, the current size of the Eurozone’s firewall is insufficient,
he said, predicting that policy-makers would determine as much. His
hope, he said, is “that the size will be significantly increased.”
This would allow Europe to “buy time for countries like Spain and
Italy” to implement structural reforms on labor and product markets.
As for the ECB, its three-year LTRO, a second of which is planned
for late this month, was a major contribution to stability, inasmuch as
it “provided the liquidity security banks needed.” The major purpose of
the LTRO “was to avoid a major credit crunch” in EMU, he said.
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
[TOPICS: M$$CR$,M$X$$$,MGX$$$,M$$EC$,MT$$$$]