WASHINGTON (Reuters) - Time is running out for reforming the euro zone while the urgency of doing so for policymakers has been reduced due to a robust economic rebound in the single currency bloc, top European economic officials warned on Thursday.
The 19 countries that share the euro are now enjoying the strongest growth in a decade after years of economic crisis that almost unraveled the euro zone.
Top policymakers have argued that the euro zone should fix its remaining weaknesses while its economy is on the upturn so that it is better prepared for the next downturn.
But progress was hampered by the lengthy coalition talks that followed Germany’s elections last September. The euro zone’s recent strong economic growth has made things worse, said Klaus Regling, the head of the European Stability Mechanism, the euro zone bailout fund.
“The good economic times we experience in Europe at the moment make it more difficult to forge a consensus: there is no sense of urgency and complacency may settle in,” Regling said in a speech at the Brookings Institution in Washington.
The reforms under discussion are to connect euro zone economies more closely, make them more resilient to future crises, and to make banks more secure.
That would entail securing enough cash to orderly resolve even large failing banks, setting up a euro zone insurance program for bank deposits and creating a pool of money to help euro zone governments weather troubles not of their own making.
It would also mean transforming the ESM into a European Monetary Fund that would monitor euro zone economies and be ready to step in quickly if needed.
All of these ideas are controversial.
“We are some way from reaching a consensus on the priorities and method for moving the euro area forward, and time is running out,” European Commissioner for Economic and Financial Affairs Pierre Moscovici said in a speech at the Peterson Institute for International Economics.
Agreement on key euro reforms will be more difficult as time passes because after the summer holidays in Europe many policymakers are likely to be side-tracked by campaigning for the European Parliament elections in May 2019.
Politicians will also busy themselves with the selection of a new European Commission, a new chairman of EU summits and a new head of the European Central Bank - all due in 2019.
“If the June Euro Summit fails to take the necessary decisions, I fear the momentum will be lost,” Moscovici said, referring to a meeting of euro zone leaders that is to give political direction to further work on euro zone changes.
Moscovici and Regling were speaking on the sidelines of the International Monetary Fund and World Bank spring meetings.
Reporting by Jan Strupczewski; Editing by Shri Navaratnam and Paul Simao