- Alan Greenspan, former head of the U.S. Federal Reserve
While European policymakers are struggling to create a strong banking union, and conduct all the necessary stress tests to avoid another crisis, former head of the U.S. Federal Reserve Alan Greenspan pointed out that the whole region would be able to survive only after a formation of a political union. He stressed out that neither a creation of a common economic union nor monetary space can assure a long-term growth and prosperity for the 17-nation economy. Economic misbalance and divergence of growth among European countries is only making the situation worse. Interest rate on government securities of southern countries rocketed, while they are fluctuating around stable levels in such countries like Germany, the Netherlands, Austria or Finland. While analysts are considering the worse is over, as the economy emerged from its longest-ever recession, Greenspan does not exclude the possibility of another severe financial crisis.
Another headache for policymakers all over the world is heating up currency wars. After the ECB cut its benchmark interest rate to a new record-low and the Czech central bank intervened markets for the first time in 11 years, another round of currency wars is approaching. With the IMF cutting down its global growth forecast and inflation at level that may hinder investment, governments and central bankers would be forced to reconsider their policies to boost competitiveness through weaker currencies.
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