Eurozone set-up 'unsustainable'
The Eurozone set-up is unsustainable, the head of the European Central Bank has told EU leaders.
He warned they must quickly come up with a broad vision for the future to get the bloc through the financial crisis.
Mario Draghi said that the crisis had exposed the inadequacy of the financial and economic framework set up for the euro monetary union launched in 1999.
"That configuration that we had with us by and large for for ten years which was considered sustainable, I should add, in a perhaps myopic way, has been shown to be unsustainable unless further steps are taken," he said in response to questions in the European Parliament.
Mr Draghi said the central bank had done what it could to fight the debt crisis by reducing interest rates and giving one trillion euro (£800 billion) in emergency loans to banks.
But it was now up to governments to chart a course ahead by reducing deficits, carrying out sweeping reforms to spur growth and by strengthening the euro's basic institutions. The ECB cannot "fill the vacuum of the lack of action by national governments" in those areas.
He said the next step "is for our leaders to clarify what is the vision ... what is the euro going to look like a certain number of years from now. The sooner this has been specified, the better it is."
European officials have worked to strengthen rules against piling up debt and to tighten surveillance over countries' budgets and economies. More wide-ranging measures - such as a common finance ministry or shared borrowing through so-called Eurobonds - have not found agreement.
Mr Draghi said one first step would be to impose tighter central control over banks through a banking regulator that could force banks to restructure and take over the burden of bailing them out. The European Commission announced plans for such a "banking union" today.
Mr Draghi said bailouts for Bankia in Spain, and before that Dexia in Belgium, show that national regulators are reluctant to admit the extent of troubles at home. That only has the effect of raising the end costs of rescuing the banks and undermining trust and transparency, he said.
www.ecb.int(European Central Bank)