IMF’s role in Eurozone crisis criticised by Juncker

EPA-EFE/PATRICK SEEGER

Former European Central Bank President Jean-Claude Trichet, European Central Bank President Mario Draghi, Antonio Tajani, President of the European Parliament, and Jean-Claude Juncker, President of the European Commission (L-R), stands together at the European Parliament in Strasbourg, France, 15 January 2019.

IMF’s role in Eurozone crisis criticised by Juncker


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With the EU celebrating the 20th birthday of the euro, the unbridled success story that is often presented to the public by the European Union’s institutions is not entirely accurate, according to European Commission President Jean-Claude Juncker, who went on to criticise the International Monetary Fund (IMF) for its handling of the Eurozone crisis, saying too much space had been given to the IMF when it came to the management of the financial meltdown a decade ago.

Juncker also . said that a lack of solidarity in the management of the Greek crisis further exacerbated the wider debate over the EU’s financial stability, but that recent developments had left him feeling encouraged following the conclusion of the austerity measures that had been imposed on Athens for the last several years.

“I am delighted to see that Greece and Portugal have found a place, I do not say a place in the sun, but a place among the old European democracies,” said Juncker.

A diehard champion of pan-European initiatives and never one to undermine “the success” of the euro as a European project, Juncker offered a degree of praise for himself saying he was one of the few politicians who believed that the euro could become a dominant reserve currency on the international market.

“Deputies, journalists, law professors and economists, especially in Germany, all said that it (the adoption of a single currency) would be an event that would have led the EU to the edge of the abyss,” added Juncker, suggesting that “the path undertaken for 20 years has been crowned with success”.

Jucnker was critical, however, when it came to the topic of economic and social convergence among the EU’s member, which he says “still leaves much to be desired”, including imperfect economic policy coordination.

“It (the EU’s economic policy) is not perfect. It will never be perfect, but we need to do more on the coordination of economic, budgetary, and fiscal policies…we can not lower our guard,” said Juncker.

Draghi says the euro has safeguarded the Single Market

European Central Bank (ECB) President Mario Draghi turned his focus to the euro’s importance when it came to sustaining growth and the bloc’s common market, saying, “With the Single Market, we have a powerful engine of sustainable growth to underpin our living standards. The euro has safeguarded the integrity of the Single Market. Today, our economies are integrated to a point that was not imaginable when the euro was designed. Intra-EU exports rose from 13% of EU GDP in 1992 to 20% today, and value chains are everywhere in the euro area.”

According to Draghi, the euro has produced two decades of price stability in countries that had never had a predictable economy in the past.

“Stable prices have fostered people’s confidence in the value of their savings, which is one of the conditions for prosperity. Based on such confidence, firms invest and create new jobs,” said Draghi.

Draghi did, however, stress the need for more solidarity within the currency union, as this “magnifies the ability of individual countries to retain the sovereignty over the relevant matters…sovereignty that would otherwise be lost in this global world,” said Draghi, adding, “this has given to all members of the euro area their monetary policy sovereignty, compared with the pre-existing monetary arrangements.”

In addition to stability, Draghi also pointed to the euro’s success in giving the eurozone members a collective voice in the regulation of international financial markets, a position he says “has been fundamental in reshaping the world financial regulation after the global financial crisis.”

The ECB’s former president, Jean-Claude Trichet, echoed both Juncker and Draghi in his assessment of the euro’s achievements, saying it was a success when it comes to “monetary credibility and stability”, adding “the euro showed that the disintegration prophecies that would have occurred in a crisis were false.”

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