Central Bank President Warns That Euro Is Unstable

May 31, 2012
Originally published on May 31, 2012 8:58 pm
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This is ALL THINGS CONSIDERED, from NPR News. I'm Melissa Block.


And I'm Robert Siegel. The euro needs a vision - that was the message today from European Central Bank president Mario Draghi, speaking before the European Parliament. He warned that the current plan backing the single currency is unsustainable.

And as NPR's Sylvia Poggioli reports, governments may have to make some tough choices to keep the eurozone intact.

SYLVIA POGGIOLI, BYLINE: Draghi's remarks were among the harshest by a European official since the eurozone crisis erupted three years ago. Draghi said the crisis has exposed the inadequacy of the financial and economic framework set up for the single currency in 1999. The European Central Bank, Draghi said, cannot fill the vacuum resulting from the lack of action by national governments. He urged leaders to come up with a vision of what the euro is going to look like some years from now.

The ECB president compared Europe's current disarray over euro policy to a person crossing a river in a thick fog, while struggling against a strong current. He or she continues fighting, Draghi said, but does not see the other side. What we are asking is to dispel the fog.

The single currency, used by 17 countries, was set up without a common economic and fiscal policy, one of the main causes of the current debt crisis in the eurozone. Draghi suggested, as a first step, tighter central control over banks through a banking regulator that could force banks to restructure and take over the burden of bailing them out.

Draghi's comments come at a time of mounting anxiety over the possible impact of a Greek euro exit, as well as increasing calls for a shift from strict austerity policies - as dictated by Germany - to a more pro-growth strategy.

Sylvia Poggioli, NPR News. Transcript provided by NPR, Copyright NPR.