Photo Credit: UCD LawSoc Facebook
In an address to UCD’s Law Society two weeks ago, Jean-Claude Trichet, former President of the European Central Bank, spoke of the origins of the Euro-zone banking crisis.
Mr. Trichet highlighted the continuing absence today of instruments to combat financial crisis’ of this kind in the future. Mr. Trichet placed particular emphasis on the half achievement of endeavours since the foundation of the single currency as being a destabilising factor during the financial crash. He also spoke about his unease with the laxness he sees throughout the Euro zone at present, and stated that there was still an absence of fiscal discipline.
In accounting for the lack of proportionality in terms of how countries with the Euro were affected following the crash, Mr. Trichet indicated that with a single-currency there is quid pro quo of going by the rules in turn for the benefits of a monetary union. Mr. Trichet indicated that those countries who followed the rules such as Germany, are in a good situation now.
Mr. Trichet also criticised those who believe the narrative that the Euro was a bold endeavour which was very fragile and not persistent in the long run. He mentioned with pride that the 2008 crash plummeted the euro-zone into the worst financial since World War II, and having survived this stress test, Mr. Trichet reinforced the resilience of the Euro. He also pointed out that the Euro Zone consisted of 15 countries when the collapse of Leeman Bros occurred and four new countries have joined since then. Mr. Trichet expressed his frustration that arguments like this are never communicated.
For further proof, Mr. Trichet cited the last opinion survey made in November 2016, the people of Europe had a 70% positive response for backing the euro. This was on a par with the level of support before the economic crash.
Mr. Trichet was careful to emphasise that the recovery process is not yet complete, and he expressed his hopes that this process will continue to be able to deliver, stating that it doesn’t suffice to persevere, there is also a need to provide jobs. He acknowledged that we have hard work to do in completing the single market and the reforms which are overdue.
Whilst many countries still have too high levels of unemployment, Mr. Trichet ended his address with a hopeful tone for the future of the Euro and financial recovery.