EU member states urged to work together to restore confidence

The 27 member states of the European Union need to think regionally and act locally when it comes to restoring confidence in the financial sector. End Quote

(1888PressRelease) January 20, 2012 - This is the view of European Commission member Michel Barnier, who admits that the economic recovery has almost ground to a halt after making steady progress.

While insisting that the crisis in the eurozone is not over the single currency itself, Mr Barnier admits that ongoing concern about sovereign debt in the region has spilled into the interbank market.

The true crisis is one of confidence, he told delegates at the Asian Financial Forum Hong Kong, with fears over a collapse in the government bond market preventing forward movement.

To restore confidence and get back on track Mr Barnier wants to see important structural reforms, including the strengthening of the banking sector and the creation of a stability fund which will lend to countries struggling under the weight of their debt.

"We must build the economic pillar which was lacking when we created the euro ten years ago," he said in his speech.

"It will be demanding for EU countries. But these rules are necessary if we want to build a stronger and more convergent economic area.

"The solution to the sovereign debt crisis is not less Europe but more integration."

Following on, David Lipton, First Deputy Managing Director of the International Monetary Fund, suggests that Europe also needs to strengthen its ties with the emerging markets in Asia.

The economies of China and India may show great promise, but their level of success is also tied to achieving stability in the eurozone. With this in mind, Mr Lipton believes that strengthening the relationship between Europe and Asia is an important step in helping both regions move forward.

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