Mechanism may be needed for euro exit by countries
Billionaire investor George Soros said it’s “probably inevitable” that a mechanism will have to be put in place to allow weaker euro-region economies to exit the single currency.
“We are on the verge of an economic collapse which starts, let’s say, in Greece, but it could easily spread,” Soros said in Vienna yesterday. “The financial system remains extremely vulnerable.”
He said Europe is in a crisis, centered around the euro, and that the authorities are only engaged in buying time, but that time was working against them.
Europe faces a choice, Soros said, to look for solutions at a national or European level. He called the survival of the euro “vital for all.”
“There must be a European solution. A plan B must be developed,” said Soros.
Concern that Greek lawmakers will fail to pass austerity measures in coming days to ensure the next instalment of the nation’s bailout is roiling global markets and pushed the euro to a record-low against the Swiss franc last week.
Over the long term, he said, the euro was bound to fail unless a political union was also established. He said that while the eurozone had a common central bank, it had failed to set up a central treasury and had no common fiscal policy. The euro had created divergence, where it had been expected to create convergence, he said, comparing the levels of competitiveness in Spain and Germany.