“Changing the institutional architecture of monetary and financial policies is urgently needed” Xavier Vence

Last November 13, the Centre Maurits Coppieters and the Fundacion Galiza Sempre organised a debate with Xavier Vence, author of the report on “An alternative economic governance for the European Union”

During his presentation Vence argued that a deep change is needed when it comes to the architecture of the European Union and the still-in-the-making banking Union.

He believes that “further European integration needs to be preceded by efforts in social, economic and regional cohesion. Otherwise, increasing economic inequalities (both social – higher vs lower income citizens – and territorial – central vs peripheral EU countries and regions) created by an overwemengly liberal interpretation of the European treaties,  will persist. If fiscal and monetary policies do not change, trend towards a des industrialised peripheral countries will remain and it will be very difficult for those countries to maintain productivity and capacity to generate wealth, employment and Demand”.

A Union with increasing inequalities is not feasible, Vence argues:  “Monetary Union won’t work because of the mere fact that the units of the union are too heterogeneous. A change in the way europe understand its own competence, regional, agricultural and industrial policies is needed to guarantee preservation of the productivity and industries all across Euorpe”.

Moreover, he believes that “a change of the institutional architecture of the monetary and financial policies is urgently needed: Sustainable economic development requires a reform of the European Central Bank (ECB)”. Mr.Vence advocated for setting up tool to transform the ECB into a lender of last resort for the EU Member States, to increase its competences (making it also responsible for growth not just inflation) and to make it answerable before the European Parliament.

He also believed that the bail out strategies for private banks have been detrimental of the real economy and demanded a new public banking model, one that ensures credit for small and medium enterprises (SMEs).

“Those are the changes Europe needs to exit crises, to develop industrial capacities, to create employment and to ensure survival of the welfare state” he concluded.

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Source: Praza.com – Espazo Europa

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