News / Europe

Europe's Chief Banker Says Eurozone 'Unsustainable'

President of the European Central Bank Mario Draghi reports to the Economic Committee, in capacity as the head of the European Systemic Risk Board, at the European Parliament in Brussels, May 31, 2012.
President of the European Central Bank Mario Draghi reports to the Economic Committee, in capacity as the head of the European Systemic Risk Board, at the European Parliament in Brussels, May 31, 2012.
VOA News
Europe's chief banker says the current operation of the 17-nation euro currency bloc is "unsustainable" and that it must create a new vision of how it will manage its affairs in the coming years.

The head of the European Central Bank, Mario Draghi, said the financial institution has done what it could to combat the eurozone's two-year government debt crisis. But he told the European Parliament in Brussels on Thursday that the currency union's individual countries needed to strengthen the eurozone's structure to control spending and boost Europe's stagnant economy.

He said the way the eurozone has evolved since its 1999 founding "has been shown to be unsustainable." Draghi called for a new eurozone mandate.

"The next step is to basically for our leaders really to clarify what is the vision for a certain number of years from now. How is he euro going to be, to look like in a certain number of years from now? What is the union vision that you have a certain number of years from now? And I think the sooner this is specified the better it is," he said.

The bank chief said that too often European leaders had taken half-steps in attempting to deal with the debt crisis, such as in the recapitalization last year of the Franco-Belgian bank Dexia and now the $24 billion bailout of the debt-ridden Spanish bank Bankia.

"I think what Dexia shows, and Bankia shows as well is that whenever we are confronted with the dramatic need to recapitalize, if you look back, the reaction of the individual governments, countries, supervisors, national supervisors is first to say, underestimate the importance of the problem, then come out with a first assessment, then a second, then a third, then a fourth, and this has been the experience I would say everywhere," he said. "If you look at it, all countries have done exactly the same thing. That is the worst possible way of doing things, because you end up, obviously everybody ends up doing the right thing but at the highest possible cost and price, so I think I urge really all governments to keep this in mind, that it's better to, in a sense err because of too much at the very beginning, rather than err by saying too little."

The eurozone is facing several imminent problems, the chief of which is whether economically troubled Greece stays in the currency bloc or becomes the first to leave it. Greece's mid-June parliamentary elections have effectively become a referendum on its eurozone membership.

Meanwhile, the Madrid government is struggling to figure out how to finance its takeover of Bankia, beset by billions of dollars in unpaid real estate loans.

In Washington, International Monetary Fund chief Christine Lagarde was set to meet with the deputy Spanish prime minister, Soraya Saenz de Santamaria, about the country's economic plight. The IMF said there are no plans for a Spanish bailout. But a business newspaper, the Wall Street Journal, reported that the IMF's European division has started to develop contingency plans in case Spain needs funds to complete the bank takeover.


Some information for this report was provided by AP, AFP and Reuters.

You May Like

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

1855 Slave Brochure Starkly Details Sale of Black Americans

Document lists entire families that were up for sale in New Orleans, offering graphic insight into the slavery trade More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs