Mugur Isarescu: Europe's problem is the competitiveness difference between North and SouthPublish date: 19-04-2010
"The problem of competitiveness is becoming a vital issue for the future of every country. If we're looking at EU's southern side we reach the conclusion that the problems start when it comes to competitiveness. There is a competitiveness difference between North and South and this is Europe's problem today", Romanian Central Bank governor Mugur Isarescu declared in the opening of a symposium on competitiveness.
Isarescu believes that the issue of competitiveness is essential in Romania as well. According to him, states often prefer a quick fix with short-term advantages. "The problem of competitiveness is vital for Romania on a medium and long-term perspective. States often choose between stability and a short-term alleviation, in spite of long term balance, and this be a fatal decision for the long-term perspective and stability", Isarescu said.
The competitiveness gains value especially as Romania is heading towards joining the euro zone. A correspondent level of competitiveness needs to be mirrored first in the central parity which paves the way for ERM2 and, later, in the conversion rate agreed with the European Central Bank, the European Commission and the other member states. Blockages caused by the drop in prices and salaries would burden and would make it more costly for the adjustment of a over-evaluated parity under the relation between employment and economic growth.
Isarescu also talked about the issue of competitiveness during a discourse he held in Spain, Barcelona. "In other economies, the authorities want depreciation due to the favourable effects on external competitiveness. In this sense, we can recall the massive interventions of the Swiss National Bank and the Singaporean dollar devaluation in the spring of 2009, the Israeli Bank systematic interventions Thai, South Korean, Singaporean and Philippines central banks focused interventions".
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