Jacques de Larosière: Unless new policies are forthcoming, a new euro crisis could erupt sooner or later.
A sovereign currency represents the quintessence of the issuing country: the collective characteristics of the nation. The single currency of the EU, the euro, is far removed from this status.
Rather than demonstrating unity, it is a continuing source of tension and dispute among the eurozone’s constituents.
Macroeconomic divergence is further demonstrated by the so-called Target-2 imbalances that represent the national central banks’ intra-euro area claims and liabilities.
Spain and Italy register liabilities of around 28 per cent of gross domestic product, while Germany has a net claim of about 26 per cent.
Another basic problem has been ultra-accommodative ECB monetary policies.
The revision of the stability and growth pact must be ambitious and immediately effective to prevent an imminent euro crisis.
Jacques de Larosière Financial Times 30 October 2023
The writer The writer is a former managing director of the IMF, former governor of the Banque de France and former president of the European Bank for Reconstruction and Development
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