Europe’s flawed political mechanisms condemn the bloc to repeated crises, and the notion of ejecting a member from the euro is an “evil genie” with destabilising consequences, a top central banker said on Thursday.
Kicking out a euro member would raise questions about which country is the next one to fall, destabilising the entire bloc, so the euro has to be irreversible, ECB executive board member Benoit Coeure said on Thursday.
Before Greece was bailed out this month, it was nearly ejected from the bloc. Some, including Germany’s finance minister, advocated a “temporary” exit, a proposal rejected by the central bank.
ECB President Mario Draghi has repeatedly said that the euro was irreversible. Greece’s brush with ejection shook confidence in that commitment and the ECB’s ability to hold the bloc together.
“The exit of a member country would inevitably lead economic actors to wonder who would be next, with all the potential destabilising effects that such speculation could entail,” Coeure told a meeting of French diplomats in Paris.
“The genie will not be put back in its bottle once and for all until it is clear that such a risk will not rear its head again,” he said.