The European Central Bank has to play a central role in solving the euro crisis

(Helsinki 30.12.2011 - Juhani Artto) Economists for the three Finnish union confederations (Akava, SAK and STTK) published a discussion paper on the euro crisis one month ago. The 11-page paper (pdf) examines and analyses the root causes of the present crisis and includes several proposals on how to get out of it. The economists stress the need to safeguard the solvency of the crisis states and also the need to recapitalise European banks in general.

They consider that the new stability instruments, the EFSF and ESM, are not sufficiently extensive. However, for economic and political reasons they cannot be expanded through national budgets. "The only operational alternative that remains, is to increase the role of the European Central Bank", the economists conclude.

They dismiss the idea of trying to solve the debt crisis by eurobonds that would be jointly issued by the eurozone states. It would make market loans cheaper for countries that have managed their economies poorly and more expensive for countries that have managed their economies properly, the Finnish experts argue.

Instead eurobonds could be used, for example, "to finance major pan-European initiatives that aim at advancing the growth potential and competitive ability of the EU", the union economists write.