The euro is a currency with a state, says ECB's Coeure

PARIS Sat Dec 1, 2012 8:06pm IST

A woman holds a sign in front of the Euro currency sign next to the European Central Bank (ECB) headquarters during a demonstration against the Euro Finance Week in Frankfurt November 23, 2012. The sign reads:''Finance bubble rules''. REUTERS/Lisi Niesner

A woman holds a sign in front of the Euro currency sign next to the European Central Bank (ECB) headquarters during a demonstration against the Euro Finance Week in Frankfurt November 23, 2012. The sign reads:''Finance bubble rules''.

Credit: Reuters/Lisi Niesner

Related Topics

PARIS (Reuters) - European Central Bank policymaker Benoit Coeure urged euro zone governments on Saturday to forge a closer political union, arguing "the euro is a currency with a state" whose branches of government need more clearly defining.

Praising the deal reached earlier this week to reduce Greece's debt burden as an unprecedented commitment by euro zone governments to keep the crisis-wracked state within the single currency, Coeure told an economic forum in Paris there needed to be closer political coordination to manage crises.

"The notion that the euro is a currency without a state is in my view misguided," he said. "The euro is a currency with a state - but it's a state whose branches of government are not yet clearly defined."

Commenting on possible steps in the right direction, Coeure said he supported the idea of a single euro-zone Treasury and eventually common euro bonds.

He insisted that for its part, the ECB would do everything within its mandate "to ensure price stability in the euro area and therefore trust in the euro as a currency," he said.

Greece's international lenders on Monday agreed on a package of measures to reduce Greek debt by 40 billion euros, cutting it to 124 percent of gross domestic product by 2020.

Although the technical details have yet to be finalised, Coeure said, he pointed out this was the first time finance ministers had jointly committed to keeping Greece in the euro.

Commenting on the ECB's own measures to prevent the euro zone falling apart, Coeure highlighted the central bank's new bond-purchase programme, dubbed Outright Monetary Transactions (OMT).

OMTs aim "to price out a type of catastrophic risk premium that investors demand in conditions of market paralysis," Coeure said in the text of a speech for delivery at the forum.

"It was breakdown risk in the early stage of the crisis, the risk that the payments system would seize up completely. It is break-up risk now," he added.

(Reporting by Lionel Laurent; writing by Paul Carrel, editing by Gareth Jones and Keiron Henderson)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Reliance Q4 sales rise, refining margin narrows.  Read 

Innovative Solution

Innovative Solution

Turning smog into jewels - a Dutch designer's solution to Beijing's pollution.  Video 

Insider Trading

Insider Trading

Rajaratnam's brother loses bid to dismiss insider trading charges.  Full Article 

Literary Giant Dies

Literary Giant Dies

Mourning and memories in Gabriel Garcia Marquez's languid hometown.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage