IMF urges deep reform of EU's financial system
Euro zone advised to work as single economy
March 21, 2010
London : The International Monetary Fund (IMF) is pressing Europe to speed and deepen reform of its financial system, urging the continent to act more as a single economy even as disagreement intensified over how to help Greece.
In comments on Thursday, German officials distanced themselves from the possibility of a European-led bailout of Greece, suggesting the IMF should provide any last-resort fix for the spending and debt crisis in Athens.
In a speech to the German parliament, German Chancellor Angela Merkel even suggested that countries that continually flout European Union budget guidelines — as Greece has done — should be removed from the euro zone group of nations that use a common currency, according to Bloomberg News.
‘Breaking point'
On Friday, however, IMF managing director Dominique Strauss-Kahn made a direct appeal for European countries to jettison the localised thinking that still governs key parts of the European economy in favour of a continent-wide approach.
The debate over national as opposed to "transnational" laws, IMF staff wrote in a separate analysis, had reached "a breaking point" that the continent's politicians needed to address.
"Modest reforms that maintain a pretence of progress but continue business as usual are not sufficient," Strauss-Kahn said in a speech to the European Commission, arguing that a continued insistence on "home-country control" could jeopardise European economic growth.
"Europe needs a fundamental overhaul of its financial stability architecture," Strauss-Kahn said.
Though Strauss-Kahn's remarks focused specifically on banking regulations, they come at a time of acute focus on how Europe plans to address problems in Greece — and potentially in Ireland and elsewhere.
The continent is also torn over the degree to which the recent economic crisis should lead it to develop additional common rules for its economy.
The debate has direct repercussions for the larger effort to reform the global financial system: Differences of opinion within Europe and between Europe and the US over financial regulation may make it impossible to coordinate policy among the world's major capital markets, a situation that some economists and analysts feel could make another crisis more likely.
"This is a blow to Europe," said Domenico Lombardi, a senior fellow at the Brookings Institution and a former executive director of the IMF. "It is not just a currency or a monetary union, it is a political project, and if the Europeans do not manage to devise a plan of action and Greece has to resort to the IMF, it is a sign of impotency."
Greek Prime Minister George Papandreou reiterated on Friday that his country considered an appeal to the IMF "a last resort".
Euro zone advised to work as single economy
March 21, 2010
London : The International Monetary Fund (IMF) is pressing Europe to speed and deepen reform of its financial system, urging the continent to act more as a single economy even as disagreement intensified over how to help Greece.
In comments on Thursday, German officials distanced themselves from the possibility of a European-led bailout of Greece, suggesting the IMF should provide any last-resort fix for the spending and debt crisis in Athens.
In a speech to the German parliament, German Chancellor Angela Merkel even suggested that countries that continually flout European Union budget guidelines — as Greece has done — should be removed from the euro zone group of nations that use a common currency, according to Bloomberg News.
‘Breaking point'
On Friday, however, IMF managing director Dominique Strauss-Kahn made a direct appeal for European countries to jettison the localised thinking that still governs key parts of the European economy in favour of a continent-wide approach.
The debate over national as opposed to "transnational" laws, IMF staff wrote in a separate analysis, had reached "a breaking point" that the continent's politicians needed to address.
"Modest reforms that maintain a pretence of progress but continue business as usual are not sufficient," Strauss-Kahn said in a speech to the European Commission, arguing that a continued insistence on "home-country control" could jeopardise European economic growth.
"Europe needs a fundamental overhaul of its financial stability architecture," Strauss-Kahn said.
Though Strauss-Kahn's remarks focused specifically on banking regulations, they come at a time of acute focus on how Europe plans to address problems in Greece — and potentially in Ireland and elsewhere.
The continent is also torn over the degree to which the recent economic crisis should lead it to develop additional common rules for its economy.
The debate has direct repercussions for the larger effort to reform the global financial system: Differences of opinion within Europe and between Europe and the US over financial regulation may make it impossible to coordinate policy among the world's major capital markets, a situation that some economists and analysts feel could make another crisis more likely.
"This is a blow to Europe," said Domenico Lombardi, a senior fellow at the Brookings Institution and a former executive director of the IMF. "It is not just a currency or a monetary union, it is a political project, and if the Europeans do not manage to devise a plan of action and Greece has to resort to the IMF, it is a sign of impotency."
Greek Prime Minister George Papandreou reiterated on Friday that his country considered an appeal to the IMF "a last resort".