Euro area reform cannot wait, says Eurogroup President Mário Centeno
The euro area needs to act now to complete Europe’s economic and Monetary Union so as to realise the full benefits of the euro and defeat populism, said Eurogroup President Mário Centeno, at the Brussels Economic Forum.
“When our leaders meet in three weeks’ time, here in Brussels, we have a choice to either remain vulnerable to the next crisis and to political or market instability; or to be bold and decide to take the euro more seriously,” he said, in a keynote speech closing the Forum.
While there is consensus that the euro must be strengthened, differences of opinion remain among Member States on how this can be achieved. Compromise and a step-by-step approach might be how things typically are done in Europe but, at the same time, the end goal must be very clear, today more than ever, he said.
When given his current mandate last December, the Portuguese finance minister, a respected economist, had a remarkable success story to his name for leading his country out of its bailout programme in three years. “When I was mandated, we thought it was the perfect time to finish the EMU’s construction. However, memories of the financial crisis are fading fast,” Centeno remarked.
Faced with a possible collapse of the common currency during the crisis, Member States found the strength to do what was necessary to save it by “crossing the reddest of lines” in Europe, “power and money”, creating the European Semester, the Banking Union and the European Stability Mechanism (ESM). And it paid off: growth has been restored, unemployment is at its lowest for many years and all euro countries have, for the first time ever, a public deficit of less than 3%.
“But”, Centeno warned, “as the EMU is still incomplete, so are the results. We must stand ready to move the project forward. It is the only way to beat populism.” Critics from this political camp tend to either claim that the euro creates free riders, or, conversely, that it is a straightjacket for Member States. To debunk these claims, progress must be visibly made, he said; warning that while patience was a requirement, the time had come to decide, not procrastinate.
To begin with, the Banking Union must be completed, and the ESM must be seen as a credible strategy for risk management. It has been a success story so far, Centeno remarked, but its instruments, some of them never used, must be reviewed.
“The euro cannot just be a symbol”, he concluded, “a currency is a reflection of its society and defending and strengthening it means defending and strengthening the market economy and our social model. Also, it still is the cheapest way to prosperity for Europe.”
