Live Blog: 'The Future of the Euro Zone' Event in Davos
This is a live blog from "The Future of the Eurozone," an event at the World Economic Forum in Davos, Switzerland, in which our panelists will debate the question, "How will the Eurozone economies emerge from the euro crisis?"
The event's panelists include:
Francois Baroin, minister of economy, finance and industry of France; Luis de Guindos Jurado, minister of economic affairs and competitiveness of Spain; Olli Rehn, vice president, economic and monetary affairs, European Commission, Brussels; Wolfgang Schauble, federal minister of finance of Germany.
The Future of the Eurozone is chaired by Maria Bartiromo, anchor of CNBC's "Closing Bell."
All times are Central European Time (CET). The event is scheduled to run one hour.
10:28 am The crowd settles in at Congress Hall within the Congress Centre in Davos.
10:33 am The panelists reach their places on stage, with Bartiromo at center.
10:47 am Rehn of the EC says Europe is suffering from a "crisis of confidence," and calls for 1) a greater focus on a "new fiscal compact" 2) strengthened financial firewalls and 3) a focus on growth and employment, plus cooperation from "our American and British friends."
10:53 am Schauble of Germany draws the distinction between the actions taken in the short term and in the long term. He says they must be the same, "moving in the same direction." Greece, he says, is a unique case. He calls for a reduction in Greece's debts, less than 120 percent GDP by 2020.
10:55 am Schauble says firewalls won't work with Greece. He does not expect Greece to default. "I am sure that if everybody's ready to deliver what is agreed .... we can avoid and will avoid a default of Greece."
10:57 am Baroin of France says fiscal and economic convergence and consolidation within Europe is necessary. Germany and France must advance "at the same pace on solidarity." Negotiations on the concept of a firewall, where there is still disagreement, will be a subject of discussion between the two country's leaders on Monday.
11:00 am Guindos Jurado of Spain says Europe has a "concrete consensus" that the euro zone will avoid the problems in the future that it now faces as a result of its mistakes in the past.
11:01 am Guindos Jurado says that in terms of a firewall, it must be big enough and flexible enough "to avoid using it." All the separate governments must adhere to their commitments.
11:04 am Rehn says that there is very strong unity among the ministers of the euro zone on how the crisis will be tackled. Markets should take comfort in this. The sustainable solution for Greece is the first priority. The next few days, even, are critical, due to sought-after agreements looming in the short-term regarding "fiscal compact." He says they're "very close" to a deal on a Greek debt swap.
11:08 am Schauble says the problem with Eurobonds is that each euro zone country has its own fiscal policy. Europe has to focus on creating the right structure for fiscal union, or something like it. Rehn says he agrees with Schauble.
11:12 am Rehn draws parallels between Europe today and the situation faced by the United States after that country's Revolution, when Alexander Hamiltonmade it possible for the federal government to assume states' war debts in exchange for greater central-government powers
11:15 am Bartiromo says she will soon open the floor to questions from the audience
11:18 am Schauble says he disagrees with George Soros' assessment that Europe needs more stimulus or else it will suffer a "lost decade." He says the reduction of deficits, as Germany has demonstrated in the past, does not destroy economic growth. If you want more internal demand, "you have to deliver some confidence." That means sustainable deficits. This works in Germany, he says.
11:25 am An audience member asks for firm information from Guindos Jurado on what Spain is going to do in order to meet its debt reduction targets. Guindos Jurado says the new government of Spain, in place since December, began taking action to hit its debt targets almost immediately when it came into office. He said individual Spanish regions' new spending rules are more strict than what Brussels would have put in place for them. Spain will in the near term put forward a reform of its banking industry.
11:28 am Baroin agrees with Schauble that debt reduction is necessary, and he says that France will hit its targets. But France must also grow. And it will achieve both targets to reducing the cost of labor. Each European country, Baroin says, will tackle the dual challenge in its own way, depending on its own situation. For France, the problem, he says, is labor costs.
11:30 am A member of the audience who also happens to be a Member of the European Parliament for Sweden asks what the ministers will do to ensure that there's transparency about the process of negotiation that they're undertaking at this time. In jest, Schauble offers to give her UK Prime Minister David Cameron's phone number. Becoming serious again, Schauble says the existing political process in Europe will be respected. Rehn reiterates Schauble's stance.
11:32 am Bartiromo concludes the event.