One who puts one’s hand on a plough, should not be looking back,” is the traditional wisdom of Slovak grandparents. “Paths are made by walking,” wrote Prague-born Franz Kafka.
These should be the philosophical backbones of the EU’s position with regards to the mounting attacks it is now facing, even from across the channel.
The solution to the problem of strengthening the credibility of our eurozone consists of four essential parts: one which is needed to avoid damaging turbulence in the markets; one which is important to strengthen the resilience of the club in the future, which will cyclically bring periods of both expansion and recession; and two most important parts that involve homework that each and every member country must carry out, for the benefit of itself and hence of the whole union.
An enlarged and more flexible European Financial Stability Facility (EFSF)/ European Stability Mechanism (ESM) is pivotal to bridging any of the potential liquidity issues that member states might face when refinancing their public debt. Its capacity and ability to act in a decisive manner must send a clear message to the speculative sharks of the markets. On this point, we have seen that moving too little and too slowly only spurs the appetite of these sharks.
A strong and credible ESM is, however, not a panacea, merely a necessary prerequisite to ensure the credibility of the euro as a reserve currency able to compete with the US dollar, and to avoid dangerous waves in financial markets, that could overshadow those that quadrupled the monthly loss of jobs in the US in September 2008.
At the same time, the Wall of Credibility creates a more stable environment and creates a window of time in which to carry out deep-reaching solutions to the eurozone sovereign debt crisis.
Vladimír Vaňo is the chief analyst with Volksbank Slovensko.
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