Stournaras: The euro should become a reserve currency

The Governor of the Bank of Greece, Yannis Stournaras, reiterated his proposal for the euro to become a reserve currency in international transactions, in an interview published in the German newspaper Handelsblatt.

Stournaras argued that for the euro to become a reserve currency, a “stronger, more integrated, and growth-oriented economy in the euro area” is needed. This is especially true considering that Europe, as an economy with a high degree of openness, is particularly vulnerable to the deterioration of global economic conditions. However, the recent initiatives in EU economic policy indicate that the Union is becoming strategically resilient, the Greek central banker noted.

Referring to the Greek economy, the Governor of the Bank of Greece emphasised that Greece is adequately prepared for future challenges. Since the public debt crisis of the 2010s, the country has achieved a comprehensive restructuring of its economy, reduced bureaucracy, advanced digital transformation, and made significant investments in infrastructure.

The EU has also drawn important lessons from that crisis, he stated. “These include the need for timely intervention, a common approach during times of crisis, and the avoidance of austerity measures that produce results contrary to the desired ones.”

The response to the pandemic has proved this, Stournaras said. “Greece is ready to contribute to the new ‘Europe’,” he stated. “We firmly believe in deeper integration through the capital markets union, the completion of the banking union, and the implementation of joint investment projects for defence purposes and for adapting to climate change.”

Commenting on current international developments, Stournaras stated that “the United States is overturning the rules of global trade in its attempt to drastically reduce imports by imposing tariffs.” This, he said, shakes the investor confidence in an already fragile and volatile investment climate and undermines the stability of financial markets. The reluctance of investors to place funds in U.S. federal bonds is a particularly critical factor. “This has a catalytic impact on the international financial system,” Stournaras explained, “since U.S. federal bonds, as global benchmark securities, form the basis for the valuation of stocks and bonds worldwide.”

The situation in Europe is entirely different “the heads of state and government of the euro area are committed to stability, free markets, democracy, and the rule of law. The euro is supported by a politically independent European Central Bank, whose primary goal is price stability and which has proven its credibility under adverse conditions and external shocks,” Stournaras underlined.

He added that, in order to further strengthen confidence in the euro, the EU must complete the banking union, advance the capital markets union, and work toward establishing a common fiscal capacity.

Πηγή: pagenews.gr