WOLFGANG MUNCHAU: The Euro Crisis Won't Be Resolved For 20 Years, If At All

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Photo: Bloomberg Businessweek

In an FT column published yesterday, columnist Wolfgang Munchau presents a grim prediction for the eurozone: the crisis won’t be resolved for another 20 years.Munchau explains that the banking union proposed by EU leaders in their summit in late June was more or less lip-service to the European cause, and in reality displayed a continuing lack of progress towards affecting the crisis:

Angela Merkel’s answer was revealing. She told them that there is nothing to worry about. The banking union was about joint supervision, she said. There will be no joint deposit insurance. She has a very different understanding of a banking union than the European Central Bank. At most, I expect this new banking union to cover the 25 largest banks, and leave those cajas and Landesbanken in national control. This is like an alcoholic who promises to drink only the better cognacs from now on.

This course of action, Munchau suggests, would put the timetable for true fiscal reform in the euro area at something like 20 years.

Meanwhile, he argues that the stakes are becoming too high for such behaviour to continue. As German support for the euro currency mounts, it is up to Italy and Spain to present Germany with an ultimatum: reform or else, because neither country can afford to stay in the eurozone as things stand right now.

Munchau concludes that instead of progress, he saw this major takeaway from June’s summit:

The message I took away from the summit is that the eurozone will not resolve the crisis. In that sense, it was indeed a “historic” meeting.

Click here to read Muncau’s full piece >

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