Singer: Euro project fails to meet target

Prague, Sept 5 (CTK) - The project of the euro has so far failed to meet the target of markedly accelerating the economic growth of the EU, thus securing global competitiveness of Europe, and the threat of collapse of the euro zone is rising, Czech National Bank (CNB) governor Miroslav Singer said.

Should the euro zone fall apart, it would have catastrophic consequences for all the countries in the neighbourhood, including the Czech Republic, Singer said at Prague's Zofin Forum yesterday.

The euro zone's current activity is becoming ever more dependent on " non-standard policies" of the European Central Bank (ECB), on loans and fiscal transfers, according to Singer.

The euro zone should return to observation of the original principles, he said.

"Belief that the euro zone's membership will lead to greater discipline of economic policies has proven to be an illusion," Singer said.

Moreover, European institutions are not the ones to call for observing of the budget discipline, he added.

Otmar Issing, one of the euro's architects and former ECB chief economist, also described this as a problem. Introducing common euro bonds is the best way how to spoil the project of European integration and of the euro.

Issing pointed out that the Maastricht Treaty itself does not allow such thing to happen. Under the Treaty one country may not bear responsibility for debts of other countries, he said.

Political integration will not help resolve the euro zone's crisis either, according to him. It takes a long time to form a political union and also there is no support from people for such project, he said.

Return to the original principles of the project is the only way to secure a strong and stable euro, Issing said. An independent central bank should be founded with a clear mandate to maintain the price stability, he added. The stability and growth pact should also be observed and no rescue package deals violating the EU agreements should be made, according to him.

The Czech Republic vowed to adopt the single currency at a time it entered the EU (May 2004).

Singer said January 2017 is the nearest, technically possible date for the Czech Republic to join the euro. "It is the first possible date irrespective of the development of the crisis in the euro zone," Singer said. In such case the Czech Republic would have to meet the Maastricht criteria next year already.

The Czech Republic has not yet set the euro adoption date.