Eurozone needs single finance minister, says Lenihan adviser
FORMER finance minister Brian Lenihan's special adviser has said that the eurozone needs, and will eventually get, a single minister for finance.
NUI Galway academic Dr Alan Ahearne, who advised Mr Lenihan during the crisis, said a single minister for finance would not mean all taxes raised here would go to Brussels.
"Some of it will be ring-fenced and sent into a pool at the centre of the euro area," he told the Shannon Chamber of Commerce President's Lunch at Dromoland Castle.
Dr Ahearne added that the eurozone requires a big stock of money at its centre to rescue banks and rescue sovereign countries and that will require a Ministry for Finance.
"It is going to take years to get to this. Lots of treaty changes, but if governments announce that this is somewhere they would like to go to, the European Central Bank may respond positively to that and the ECB may become temporarily the lender of last resort," he added.
"That it is not what we have today, the strategy being used is that we are muddling through this crisis. We don't have a definite comprehensive solution."
Dr Ahearne said that a number of components are required for the overhaul of the architecture of the eurozone.
He said these include stricter surveillance of national fiscal and economic policy; a proper crisis-resolution framework at the centre and the need for centralised banking supervision.
Those who said that you cannot have monetary union without a form of fiscal union have been proven right, he added.
The economist predicted that the euro will survive, but said that the costs of the strategy in place to save the euro "to the real economy are very large".
He added that the eurozone response to the crisis "is eerily familiar" to the Japanese response to its 1980s recession, which resulted in two lost decades for its economy.