More Focus Needed On State Debt in Future: EU

HELSINKI: More focus is needed on the state debt of euro zone members in future to prevent possible problems in one country spreading to others, European Union Economic and Monetary Affairs Commissioner Olli Rehn said.

“Because euro zone countries’ economies are tightly connected by a currency, it is important to prevent a weak economic policy in one country from threatening the success of others,” Rehn wrote in Finnish daily Helsingin Sanomat on Sunday.

“Economic policy monitoring has earlier paid attention almost entirely to deficits, and debts have grown excessively large.”

“In the future the development of state debt must be followed more closely than before and possible downward spirals must be cut off in time,” he wrote.

Rehn said actions taken by the EU in past weeks had prevented debt-laden Greece’s problems from spreading out of control, but the crisis also revealed a flaw in the EU’s economic backbone.

“We stopped the spread of a bushfire in Greece from becoming an uncontrollable forest fire,” he said.

“The economic and monetary union’s problem has been that the monetary pillar has been from the start stronger than the economic one. The crisis has shown that both are needed,” Rehn said.