Otmar Issing, a founding member of the executive board of the European Central Bank, said the “real test is still pending” for the euro after being asked if the common currency is a success today, 20 years after it was introduced. But he added the main weakness of the euro falls down to differences in economic rules between the now 19 member states of the euro area. Speaking to German newspaper Der Tagesspiegel, Mr Issing said: “Economic policies in a number of countries have failed to do their job justice. “They behaved as they did in the past, accumulating debts and raising wages as if they could still correct them by devaluing them.
“But this instrument, so often used in the past, is no longer available with the abandonment of its own currency and the introduction of the euro.
“This is exactly where reforms have to start.”
Mr Issing went on to suggest the euro “can only survive if all countries comply with their commitments”.
He added: “If the urgently needed reforms do not happen, tensions in the euro area will continue to increase.”
The idea of quitting the single currency “can no longer be taboo”, Mr Issing argued, as he highlighted tensions between Italy and the European Commission as an example of political conflict.
Rome had been at loggerheads with European Union finance chiefs over the country’s controversial spending plans.
Italy eventually bowed down to demands as the government confirmed it would cut its deficit goal for 2019 to 2.04 percent of gross domestic product (GDP) from the 2.4 percent originally forecast.
The new offer came after Italy faced threats of disciplinary proceedings from the EU, who claimed the original budget was in breach of previous spending commitments.
Mr Issing said the problem of Italy was prominent as it showed a nation that “not only violates commitments that the country has made with the European Commission, it also gloats about its deliberate breach of the rules.”
He said: “So far, there is no provision for a country’s exit from the monetary union – the accession is considered irreversible, ‘eternal’ so to speak.
“If conflicts become extreme because of the misconduct of one country, or even several countries, then the issue of withdrawal can no longer be taboo.”