Euro zone timid, says Bank of England guv

Bank of England governor Mark Carney delivered a few home truths to the euro zone authorities in Dublin on Wednesday night. The man who runs the bank behind sterling says the single currency crowd should travel much further to pool their resources in order to maximise efficiency.

Fundamentalist questions between creditors and debtors are again in vogue as the EU powers fret over Greece. In Carney’s account, however, British and euro zone banks can weather any turmoil in Athens. Still, it’s clear that euro zone countries are in no mood to grant debt haircuts to newly installed prime minister Alexis Tsipras.

True, there is no shortage of speculation on longer loan maturities and the like. But would that be enough for Tsipras himself?

If all of this brings us right back to the wretched days of 2010 and 2011, Carney’s intervention also recalls earlier discussions on commonly issued bonds and cross-border payments between countries.

Germany shut down that debate soon enough, but Carney says such moves to reinforce the euro would be in Berlin’s own interest .The great irony here, of course, is that this is just the kind of talk that led London to steer clear of the single currency in the first place.

While Germany is chief opponent of fiscal transfers, Carney’s intervention also raises the question as to whether other member states would accept the notion.

Yet the Bank of England chief was blunt enough as he pointed to the failings of euro zone authorities.

“Although there was monetary boldness last week, the currency union has been relatively timid in putting in place the other policies and, crucially, the institutions necessary to deliver sustainable prosperity for its citizens,” he told his audience at the Department of Foreign Affairs.

“On current projections, it will take the euro area eight years to achieve the recovery that Canada secured in two.”

That’s quite a salutary observation.