Is the euro failing as it was designed to?
European Central Bank chief Mario Draghi has warned that the euro has “totally failed” and will have to be redesigned to cope with its new challenges, and his comments are likely to trigger a debate about the future of the currency.
The head of the European Central Fund has also warned of the potential for the euro to fall even further.
“We are seeing the euro collapse,” said Draghi, speaking in Munich on Thursday (local time).
Draghi’s remarks came amid growing concerns about the euro, which is now being sold as a way of helping the struggling eurozone to deal with the consequences of the Brexit vote. “
The world is seeing that the new, much more complex, and more flexible and inclusive monetary and financial instruments will be needed to provide a stable and sustainable economic environment.”
Draghi’s remarks came amid growing concerns about the euro, which is now being sold as a way of helping the struggling eurozone to deal with the consequences of the Brexit vote.
He was speaking at the European Parliament, which he chairs, and was asked about the risks of the euro.
“I am not going to say that the European economy has never suffered,” he replied.
“But it’s absolutely clear that the single currency has totally failed as it is designed to do.”
“It’s no longer a single currency,” he added.
“It is a global system of governance, which means the eurozone cannot be a single market.”
Draghuis comments follow warnings from other European officials that the eurozone is likely to fall further and that a further collapse in the euro could lead to another sovereign default.
The ECB has already warned that its policies to try to help the struggling economy could be at risk if the euro falls further.
Draghi made his comments on the eve of a two-day meeting of eurozone finance ministers in Brussels.
The meeting is aimed at finding a way out of the financial crisis.
In recent months, Draghi had also suggested that it might be time to consider raising the debt ceiling in order to force the European Commission to accept reforms.
Draghues comments come amid growing doubts about the EU’s long-term survival and its ability to keep its budget surplus in check.
The European Commission said it expected to raise the debt limit next week, but the European Council, which has the final say on such matters, said it could not yet agree to a debt-limit increase.
Draghuys comments come as the EU is also grappling with its own problems in the face of a massive migrant influx, which it has struggled to cope without, and which has led to a huge increase in unemployment.