Central bank Governor Perng Fai-nan (彭淮南) yesterday said the EU could set up a financial alliance or an economic government to help it deal with the euro-debt crisis.
The crisis is caused by sovereign debt funds that can no longer be maintained, but the eurozone is stuck in a quagmire as it is unable to move forward or bear the consequences of turning back, Perng said in a report to the legislature.
While the establishment of the eurozone has brought benefits such as a single currency, the EU still does not have a ministry of finance, Perng said.
The EU should establish a ministry of finance to prevent sovereign debt woes, like those in Greece, from spreading to other countries, he said.
Former Belgian prime minister Herman Van Rompuy has said that the most effective way to deal with such crises is to establish an EU economic government, Perng said.
Other strategies for dealing with the current crisis could include changes in the European Financial Stability Facility (EFSF), a fund set up by EU members to battle the debt crisis, Perng said.
For example, EFSF decisions require a vote by all member states, but to date three countries — Slovakia, Malta and the Netherlands — have not voted on the new measures to expand the functions to cope with the debt crisis, he said.
The policy should be changed to a majority vote, he said.
Perng said that since the Democrats lost control of the US House of Representatives, the domestic political stalemate has given rise to financial uncertainty worldwide.
US consumers are shying away from buying durable goods, while businesses are refusing to invest, he said.
While the EU debt and US poltiics are out of the central bank’s control, Taiwan is prepared for any changes in the market, he said.
Taiwanese banks have abundant capital and healthy finances, therefore, the country will be fine, he added.
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