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So What Does the Future Hold for the Eurozone?

Published: June 28, 2019; 11:33 · (Vindobona)

The Eurozone between crisis and reform. At the Austrian Academy of Sciences, the renowned European financial experts Agnès Bénassy-Quéré, Klaus Regling, Elke König and Josef Zechner discussed the structure, challenges and necessary financial market reforms within the euro zone.

(From left to right): Robert Holzmann, Agnès Bénassy-Quéré, Klaus Regling, Elke König and Josef Zechner. / Picture: © Vindobona.org

The introduction of the euro and monetary union more than 20 years ago was one of the most ambitious initiatives of European integration.

In the meantime, the euro has become a means of payment in 19 EU countries.

The euro zone is usually seen as a success story, and Austria is also one of the euro winners according to economists.

The approval of the common currency is therefore accordingly high: Three quarters of the Austrian population are satisfied with the euro, according to a survey conducted by the Austrian National Bank (ÖNB) in December 2018.

But the so-called "euro crisis" a few years ago also showed that the euro zone must continue to develop in order to remain fit for the future.

There is broad agreement that reform measures are necessary - but what exactly are they? Opinions differ on this.

A panel discussion in the ceremonial hall of the Austrian Academy of Sciences (ÖAW - Österreichische Akademie der Wissenschaften) addressed this question with international guests:

Agnès Bénassy-Quéré is an economist at the Université Paris 1 Panthéon-Sorbonne and at the Paris School of Economics. She advocates reforms in the areas of banking, financial markets, fiscal and macroeconomic policy, and risk sharing between member states.

Klaus Regling is Managing Director of the EFSF ("Euro Rescue Facility") and the ESM (European Stability Mechanism). According to him, a European deposit guarantee and a fiscal capacity for macroeconomic stabilisation would make the currency area even more crisis-proof.

Economist Elke König is Executive Director of the Single Settlement Authority (SRB) of the Single European Banking Clearing Mechanism (SRM), which was founded in 2014. She calls for ultimate fiscal protection, European deposit insurance and harmonisation of national insolvency laws in order to complete the banking union.

Josef Zechner is an economist at the Vienna University of Economics and Business Administration and a member of the Austrian Academy of Sciences. He sees the size of the banking sector and its interdependence with the member states as a central challenge and advocates a minimisation of systemic risks, among other things by creating a "safe asset" and a more diversified financial system.

Ewald Nowotny, still Governor of the Austrian National Bank, opened the discussion one day before his 75th birthday.

The debate was moderated by ÖAW member and designated National Bank Governor Robert Holzmann.