by Wang Chaowen, Zhang Zhengfu
PARIS, Oct. 13 (Xinhua) -- Former European Central Bank (ECB) President Jean-Claude Trichet called upon Europeans to decide on a single resolution authority as soon as possible.
In a recent interview with Xinhua, the Bruegel Chairman of the Board highlighted the urgency of carrying forward the project of banking union by establishing a single resolution authority without delay.
"The decision on a single resolution authority has to be taken shortly and I would urge the Europeans to do that as rapidly as possible," said Trichet, who saw the banking union as a key part of the "historical endeavor" of European integration.
Trichet, who served as the ECB president from 2003 to 2011, attributed the importance of this issue to the need of "making sure that all commercial banks in the euro area are functioning as a really single market."
"It is not particularly the fact that the European banks have problems, as all banks in the world have problems, but because banks in Europe are so closely knitted to the real economy," he added.
In Europe, banks finance 80 percent of the economy and the other 20 percent comes from market, while it is contrary in the United States with banks financing 20 percent of the economy and market 80 percent.
"For Europe, proper functioning of the banks is absolutely essential, much more than in the U.S. for instance. For the euro area, it was of particular difficulty, because the financial crisis was stretching even more the various banking sectors of the euro area, depending on the countries' creditworthiness," he said.
A high level of correlation between the creditworthiness of the state and that of the banks in that state makes it a crucial issue to complete the building of the banking union, said Trichet.
"The idea of a banking union is that whatever the problem that might appear at the moment in a state, you have a real single market of a financial sector of banks in particular, so that all banks can continue to function as well as possible," he said.
On the building of a genuine economic and monetary union (EMU), Trichet said it is a "work in progress" and a "historical process."
"Nobody would think for one minute in 1950 when Robert Schuman was delivering his seminal speech that in 2013 we have a single currency for 18 countries," he said.
Refusing to forecast when a genuine EMU could be finalized, Trichet showed his confidence in the process, "because I have observed the resilience of this endeavor."
"We can see it is very solid and has resisted the worst crisis ever, reinforcing governance of 17 countries. We had a parliament elected by a universal polling, at a level of 28 countries," he said.
Citing Jean Monnet, a chief architect of European unity, Trichet said, "It is in the crisis that you find the appropriate stimulus to go further. It is very clearly demonstrated by the recent period."
"Looking at what has been done over the last 63 years gives you a sense of what is likely to happen. But the priorities for now are to implement vigorously the economic and fiscal governance of the euro area and the 28 countries," he said.
Another urgent challenge facing the EU is to be sure that "the political union in the making has its democratic accountability and that is something we should reflect upon, which would probably give more power to the European Parliament," he said.
Concerning economic growth in Europe, Trichet noted that people are now observing the negative figures of growth to be transformed in positive figures.
"But it is no time for complacency," he said, urging European countries to make their economy more flexible so that the potentials of Europe can be tapped, more confidence will come back and consumers would consume more and corporate businesses invest more.
Trichet also commented on a paradox -- some people often said the euro is "on the brink of collapse," or it will "evaporate, disappear," but at the same time, one would say that it is overvalued and it is "a too credible currency."
"Some sceptics would have said, if you have to cope with the worst crisis ever of the advanced economy, then the new currency starting from scratch in January 2009 will not be resilient. On the contrary, that currency has been constantly credible all along the crisis."
"This is a sign that something hangs behind," he stressed, asking those people to look at the historical endeavor, taking long-term view, as the normal of looking at things.
The credibility and resilience of the euro area can also be demonstrated by the fact that "three new countries have entered or will enter the euro area since the collapse of Lehman Brothers, namely Slovenia, Estonia and Latvia."
However, Trichet warned, "We have very, very hard work to do. Nothing is written. History is not written."
"The future of the euro area will depend on the Europeans to continue to improve their economic and fiscal governance, which has been done largely under the stress of the crisis and has to go on, strictly apply what has been decided, and engage, when and where needed, on new decisions, including reinforcing democratic accountability," Trichet said.