IMF head calls for quicker Eurozone integration

Posted by admin in Management & Execution on Mon, 29/03/2010 - 14:39
flagge_eu.jpg
The head of the International Monetary Fund (IMF) has called on Europe to move more quickly towards economic integration in order to avoid a repeat of the Greek financial crisis. 
 
Dominique Strauss-Kahn, the head of the IMF, said countries within the Eurozone need to improve their economic coordination to avoid huge imbalances building in the system, adding that the 27-nation bloc's financial architecture needed "fundamental" overhaul.
 
“In the wake of the crisis, European integration must be sped up, not slowed down...now is the time to take the European project to the next, higher level," he said in a speech to Warsaw's business school. "One of the lessons of the crisis in Europe is that a single currency without enough economic policy coordination may lead to huge imbalances.
 
Another priority was for EU countries to work together to sustain the economic recovery "To restore confidence in Europe's fiscal sustainability, policymakers must formulate, communicate and begin to implement strategies for exiting from crisis-related intervention policies as soon as possible," he said.  "Having said this, policy actions that would undermine aggregate demand should be postponed until 2011. But those that do not should be implemented now." 

He said that the IMF is ready to help with the EU bail out of Greece, but said that to date it did not seem necessary. "I hope that the EU strategy for Greece works," he said. "We are ready to help Greece as with any of our members but it is not obvious today that help will be absolutely necessary." 

The Bottom Line:If Mr Cable has his way...

"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more

Links