The Yomiuri Shimbun (Jun. 22, 2012)
Show concrete measures toward eurozone integration
It is meaningful that Japan and the United States, as well as China and other emerging economies, pressed Europe to take swift action to contain the eurozone fiscal and financial crisis.
At a summit meeting in Mexico, leaders of the Group of 20 advanced and emerging economies have adopted a declaration saying the G-20's eurozone members "will take all necessary policy measures to safeguard the integrity and stability of the area."
The declaration also pointed out the growing risks and uncertainties in the world economy.
Parties backing austerity policies won a slim parliamentary majority in the recent Greek election, avoiding at least for the moment the worst-case scenario of Greece exiting the eurozone--which would inevitably plunge stock and exchange markets into chaos.
However, the future of the eurozone still remains unclear. The eurozone crisis is far from being settled as financial instability is spreading in Spain. The turmoil in Europe is holding back the world economy, slowing it down.
Achievements at G-20 meeting
Frustrated by the eurozone's slow response to the crisis, U.S. President Barack Obama piled pressure on its member economies to make more efforts during the G-20 summit meeting.
Prime Minister Yoshihiko Noda presented a united front with the United States on pressing Europe at the summit, saying, "There's no time to waste."
In response, European G-20 members including Germany and France said they will consider devising a road map toward the creation of a banking union, a plan including such measures as centralizing the supervision of banks and procedures to deal with failed banks, which currently differ from one country to another.
The nations said they will also consider strengthening fiscal integration of the area.
The fundamental problem with the euro is that although the currencies of the eurozone nations have been integrated, their fiscal and monetary policies have not. That is why the eurozone economies are still unable to find their way out of the crisis although they have implemented piecemeal measures again and again.
However, Germany remains cautious about the banking union, as it is wary of an additional financial burden. Germany is also resisting the introduction of common euro bonds, which would allow the eurozone countries to raise funds as a unit, a measure considered key to strengthening the region's fiscal integration.
It will not be easy to bridge the gaps among the eurozone economies, but they should take seriously the fact that G-20 members expressed their support for a banking union and other measures in the declaration, and deepen their economic integration.
Germany, France must take lead
Germany and France must take the initiative at a summit meeting of European Union leaders scheduled for next week to demonstrate concrete steps toward further fiscal integration to the world.
In addition, eurozone leaders should speed up their efforts to rescue Spain's banks, which hold massive bad loans. The cooperation between Greece's new government and other eurozone economies is also essential.
At the summit meeting, G-20 leaders also agreed that implementing excessive austerity measures alone will not be sufficient to rejuvenate the eurozone economy, and instead provoke financial instability.
It is praiseworthy that the G-20 members stated clearly in their declaration that "strong, sustainable and balanced growth remains the top priority of the G-20" and revised their stance of prioritizing restoration of fiscal health above all else.
In another step toward containing the crisis, China and other emerging economies pledged huge sums to the International Monetary Fund, enabling the IMF to expand its pool of emergency loans to about 456 billion dollars (about 36 trillion yen).
Markets are still doubtful the eurozone crisis will be resolved soon. In addition to the further self-help efforts of the eurozone economies, it is essential for the G-20 nations to strengthen their cooperation to contain the crisis.
(From The Yomiuri Shimbun, June 21, 2012)
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