Mech­a­nism may be needed for euro exit by coun­tries

Kathimerini English - - Business & Finance -

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.

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