The euro area is an irreversible project and the talk of Greece leaving the single currency bloc have shaken the confidence in the union, European Central Bank Executive Board Member Benoit Coeure said Friday.
“The euro area is an irreversible project, not simply a fixed exchange rate system,” Coeure said in a speech in Paris.
“…recent negotiations concerning Greece have let the evil genie of a country exiting the euro area (even temporarily) out of the bottle. The exit of a member country would inevitably lead economic actors to wonder who would be next, with all the potential destabilizing effects that such speculation could entail.”
“The genie will not be put back in its bottle once and for all until it is clear that such a risk will not rear its head again,” he added.
Coeure urged Eurozone to take benefit from the confidence in the euro to build institutions that will reinforce the cohesion of the economic and political union.
Further, Coeure said monetary policy can support growth, but it cannot create it in a lasting way. He also pointed out that the effectiveness and legitimacy of euro area will deteriorate if excessive demands are placed on the central bank.
The material has been provided by InstaForex Company – www.instaforex.com