Eurozone at risk of losing a member to default, warns Sutherland
THE eurozone remains at risk of collapse or of losing one of its members to a default, a prominent Irish banker and former EU commissioner has warned.
Peter Sutherland, chairman of Goldman Sachs International and outgoing head of the European Policy Centre think-tank, said that the failure of the single currency would have "calamitous effects" but should not be discounted.
"No matter how dire the consequences may be, they are always a risk," he said at an event in Brussels yesterday.
Governments' responses to the crisis have been "less than adequate", leaving open the potential for a default by one of the euro's 17 member countries.
"The continuing fear must remain that an unplanned, uncoordinated default by a member state may occur in the near future, and there may still be inadequate mechanisms in place at that moment to avoid contagion to others," he warned.
To avoid disaster, he said the eurozone's rescue funds or the ECB "need to be further empowered to potentially overwhelm the challenges arising from such an event".
However, he said eurozone governments should stop relying on the ECB alone.
"The ECB is providing an increasingly costly bridge between markets and banks and governments," he said.
"There is a fear of articulating what the ECB can and should do, even though it is already doing much of the role of a lender of last resort."
EU competition chief Joaquin Almunia said yesterday that he had "no doubt" about the future of the euro.