Eurozone countries must reform economies – ECB policymaker

PanARMENIAN.Net - All eurozone countries, including Germany and France, must reform their economies and work harder if they want to keep up their living standards, European Central Bank policymaker Joerg Asmussen said on Thursday, Nov 15, according to Reuters

The comments from Asmussen, a former German deputy finance minister who now sits of the ECB's Executive Board, echo concerns in Berlin about the health of the French economy, the eurozone's second largest after Germany.

German officials told Reuters last week that Finance Minister Wolfgang Schaeuble has asked a panel of advisers to examine Socialist President Francois Hollande's reform plans, concerned that France's economic malaise could impact the wider currency bloc.

"All eurozone countries, including Germany and France, need to do their homework," Asmussen said in the text of a speech for delivery at an insurance conference in Berlin.

Calling for a reform of Europe's social model, he added: "The times when one accrued debts to finance social spending are over ... If we want to keep our current living standards, we must earn them with productivity growth, more innovation and harder work."

Debts would have to be reduced in the coming years, he said.

Germany and France each grew modestly by 0.2 percent in the third quarter but with the eurozone's debt-laden members suffering deeply, the currency bloc as a whole is likely to have slid into recession.

The ECB could dispel "unfounded concerns about catastrophe scenarios", Asmussen said but only the euro zone's member states could find a long-term path out of the bloc's debt crisis.

The ECB's new bond-purchase program - dubbed Outright Monetary Transactions (OMT) - aimed to counter these concerns.

"The euro is irreversible," Asmussen said, adding that concerns that the program and the ECB's low interest rates - its main rate is at a record low of 0.75 percent - could fuel inflation were unfounded.

Looking beyond the eurozone, Asmussen said Japan and the United States had higher debt levels than the eurozone average. The United States "must undertake enormous efforts in the coming weeks to evade the so-called fiscal cliff, he added.