Eurozone Still Sensitive to Finance, Economy Shocks

The eurozone is still sensitive to finance and economy shocks, warns one of the most prominent economic representatives of the European Union, Jeroen Dijsselbloem. According to him, Greece and other countries need to undertake more reforms.

Jeroen Dijsselbloem, who will retire as chairman of the Eurogroup, which is the informal organization of eurozone finance ministers, says for the issue that the stability of the single currency depends on making labor markets more flexible than improving the functioning of capital markets. He also highlights the need for most of the work to be done by national governments, Finance Apprise reported.

“If there is an economic shock this year, many of European countries and the monetary union as a whole will not be prepared”, says the former Dutch finance minister. “As member states still carry the basic macroeconomic powers and authority, they must continue the pursuit of reform. This is the most important things”, he added.

Dijsselbloem does not oppose the idea of ??an enlarged role of the eurozone rescue fund in supporting countries that are hit by economic shocks. In his view, however, the drive to improve sustainability and competitiveness must be a priority in creating more support schemes for hurt member states.

During the term of Dijsselbloem, the Eurogroup managed the worst stage of the sovereign debt crisis and created the banking union–a project to restore faith in the stability of the financial system of the bloc.

“The achievements of the banking union are enormous”, he said. “We forced banks to really start clearing up the mess, reviewing their balance sheets, taking their losses, accumulating more provisions, selling their bad portfolios, coming out of the markets and raising new capital”, he added.

The main focus of Dijsselbloem was the fears for Greece debt whose  crisis reached its peak in 2015. According to him, although much has been said about Germany’s plans during the talks on rescue loans for temporary Grexit, in practice the countries of central and southeast Europe have lost most patience with Athens.

Dijsselbloem adds that he has never backed Greece’s exit from the eurozone, which would be “really devastating” and “a huge mistake”. Greece does not violate the EU’s budget rules and is about to leave its rescue program this year.