Yesterday we had an interesting debate in Zurich, with Beatrice Weder di Mauro, Jim O’Neill and Gerard Lyons; hosted by the Asian Leaders Series.
I argued that the European Union is failing to react properly to the challenges posed by the energy crisis.
The lack of coordination between Member States is making it more difficult, and expensive, to get adequate energy supplies.
Moreover, support to consumers and firms is very high, but different across countries. This will disrupt the internal market and, even more importantly, contribute to another significant increase in national debts.
The pressure on the ECB, which is the only “federal” institution of the Eurozone, will be extraordinary. It has designed an instrument to prevent the fragmentation of the Eurozone, but as I have argued elsewhere the instrument will impact negatively on its monetary policy goals: you cannot breathe in and out at the same time (see the article «Soplar y sorber» from last June).