Source: World Economic Forum
George Soros
|
In
an open letter published in the Financial Times on Wednesday, the
"concerned Europeans" conceded the euro was "far from perfect", but
added euro zone leaders needed to "fix its faults rather than allowing
it to undermine and perhaps destroy the global financial system".
The euro zone debt crisis has wreaked havoc on the European banking sector, culminating in state-led bailouts for a number of banks which faced liquidity issues.
It has also forced German Chancellor Angela Merkel and French President Nicolas Sarkozy to announce plans to recapitalize Europe’s banks to avoid a full-blown banking crisis.
In
the letter, Soros and the 95 others said they wanted euro zone
governments to agree on the need for a legally binding agreement that
would "establish a common treasury that can raise funds for the euro
zone as a whole and ensure that member states adhere to fiscal
discipline."
The
euro zone’s attempts at enforcing a common monetary policy without a
common treasury have been heavily criticized, but many EU member states
fear a common treasury would infringe their sovereignty.
The
letter also called for stronger common supervision, regulation and
deposit insurance within the euro zone, as well as “a strategy that will
produce both economic convergence and growth because the debt problem
cannot be solved without growth”.
Until such a legally binding agreement is in place, euro zone countries should “empower the European financial stability facility
and the European Central Bank to co-operate in bringing the crisis under control.”
"These
institutions could then guarantee and eventually recapitalize the
banking system and enable countries in need to refinance their debt,
within agreed limits, at practically no cost by issuing treasury bills
that can be rediscounted at the ECB,” the letter said.
Most
importantly, the euro zone crisis needs a European solution, they said.
“The pursuit of national solutions can only lead to dissolution,” the
letter concluded.
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