Europe Economy

Euro ‘Irreversible,’ Root and Branch Reform Needed: Rehn

Javier E. David|Special to
European Union Flag
Jonathan Kitchen | Image Bank | Getty Images

The euro is “irreversible,” but leaders have little choice other than implementing changes to prevent the euro zone debt crisis from cascading across the continent, European Union Economic and Monetary Affairs Commissioner Olli Rehn told CNBC on Tuesday.

In an interview with CNBC’s “Squawk Box,” Rehn declined to speculate on whether Spain or Italy would need a financial rescue package. However, he said European policymakers “stand ready to take action if needed” if any member state were to ask for a bailout.

European leaders need to “reform and reinforce the very foundations of the euro and the euro zone,” Rehn said. “The euro is irreversible, and it’s essential that we maintain the unity of the euro.”

Olli Rehn: Building EU Monetary Union 2.0

Rehn’s remarks came at a time when the markets of Spain and Italy are, whipsawing their government bond yields that some fear could force them into the embrace of international lenders.

Meanwhile, the European Central Bank (explain this) is readying a plan that may include a bond-buying program on par with the Federal Reserve’s massive quantitative easing (explain this).Rehn told CNBC that “to my mind, it’s clear both the EU and ECB are ready to take action once certain actions are met.”

The EU official touted what he called an “Economic and Monetary Union 2.0,” that aimed to strengthen the euro and integrate European institutions in a way that would avert future crises.

He also called upon Greece's leadership to meet the conditions demanded in its bailout terms. "I know it's very hard and painful for Greek citizens, but it is a very hard and necessary rebalancing if Greece wants to stay in the euro," Rehn said.