2017-09-15
Vasiliauskas: Purchasing power disparities narrowing too slowly, euro area reforms should be oriented towards convergence acceleration
Current discussions on reforms in the euro area should concentrate on one of the major goals for the continent – economic and social convergence, i.e. narrowing of gaps and disparities between Member States. This is the position taken by Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, who is participating in the informal ECOFIN meeting held on 15–16 September in Tallinn.
‘Reforms implemented within the euro area should be directed towards boosting purchasing power in those bloc countries where the standard of living is below the EU average. The benefits of such changes would feed through to both the European population and domestic public finances,’ said V. Vasiliauskas. He notes that at this point in time, when economic recovery in the euro area progresses, yet no clear signs of convergence between its members are visible, it is especially important to pursue this political course.
‘Deep-rooted disparities and the widening gap could lead to serious economic and social repercussions,’ warns the Chairman of the Bank of Lithuania. According to Eurostat, last year living standards in leading euro area countries were four times higher than in countries that were lagging behind, while the headline unemployment rate and youth unemployment rate – six and seven times lower respectively. In recent years, Lithuania has been nearing the EU average, yet it is still falling behind the leading countries, where the standard of living is 3.5 times higher, while the unemployment rate is as much as 2 times lower.
‘To reduce current disparities, we will have to resort to greater integration when planning future reforms. Nevertheless, we must firstly complete what has already been initiated, and implement what was agreed upon – for example, eliminate the remaining obstacles for the single market and conclude the creation of the banking union,’ said V. Vasiliauskas, stressing the necessity to remain in strict adherence to mutual agreements.
The informal meeting of Ministers of Finance and governors of EU central banks to discuss reforms within the euro area is held in Estonia (Tallinn), current holder of the presidency of the Council of the European Union. The meeting addresses a number of important issues, such as the deepening of the economic and monetary union, development of the Capital Markets Union, and tech-innovations.