Opinions on the future of the euro are divided. That is why the House of Representatives held a panel discussion with, among others, Klaas Knot of the Dutch Central Bank, various former ministers and other experts. Economics professor Lex Hoogduin of the University of Groningen has a serious diagnosis: “The euro is a patient in a coma.”
Vulnerable
While Adriaan Schout, head of the Europe Program at the Clingendael Institute, thinks the euro is doing quite well, Hoogduin takes a darker view. There is a future for the euro, but we are in a crucial moment. Most experts agree that the euro is vulnerable at the moment.”
Mats Akkerman, political journalist at BNR, also sees that euro sentiment in the House has changed in recent years. ‘Economist Harald Benink, who also participated in the round table, painted a very positive picture during the rise of the euro. But the 2009 crisis changed that sentiment. And many countries are still unable to get their high debts in order. That’s why there is certainly a criticism of the euro,’ explains Akkerman.
Structural reforms
According to Hoogduin, two things need to happen to make the euro healthier: ‘First, structural reforms need to be implemented that make countries that are currently not competitive again. Furthermore, these high public debts really need to be reduced.’
Hoogduin sees that there is broad agreement that this should be done. But according to the economist, there are some differences of opinion on how this should be done and what kind of euro one will get in the end.
Patient in coma
Hoogduin believes it is particularly important to be clear about the direction we want to go together regarding the euro. Ultimately, according to the economist, it is really a political choice, and not just an economic one.
‘The euro has one purpose and that is to be a stable currency in a strong economy. This includes instructions for use and if we don’t follow them and change the Euro, we will switch to a different product. So we don’t start with the strongest countries but with the weakest countries and in the end we get a product with high inflation and moderate growth.’
According to Hoogduin, we are now keeping the patient – the euro – in a coma. ‘If those big debts are seen as a disease, the disease is not really being fought and addressed and resolved now. But the patient is managed,’ explains Hoogduin. The economist therefore believes that the ECB provides too much support and cannot function properly because of this: “The ECB is afraid to raise interest rates if it should.”
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
