Eurozone

Financial Times
December 28, 2011

So many meetings, so little achieved. European Union leaders have held no fewer than 15 summits since the Greek crisis first blew up in 2010. There have been five grand plans and many more incremental proposals. Heads of seven eurozone governments have changed as a direct result of the debt crisis – including the replacement of Italy’s Silvio Berlusconi and Greece’s George Papandreou by the technocrats Mario Monti and Lucas Papademos. Yet the tally of real achievements is deplorably small.

The European Financial Stability Facility was groomed as a €1tn rescue fund for the euro. But its firepower and mandate remain on a tight leash. Eurobonds remain a vague and controversial notion. A voluntary debt swap between Greece and its private sector creditors is elusive. The reluctant but inevitable push for fiscal union is heading into political opposition. True, banks are being pushed to recapitalise, but with such a lack of finesse that assets are flooding the market and lending has stalled. It has been left to the European Central Bank to inject much-needed, but temporary, liquidity.

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