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People's Daily Online>>Opinion

Euro zone makes progress in systemic reforms (2)

By Zhang Zhixiang, Zhang Chao (People's Daily Overseas Edition)

16:56, December 19, 2011

The euro zone is a tight economy entity. Although the euro zone had clear provisions for the financial conditions of member countries before their entry, the lack of supervision on their financial conditions after the entry is the direct reason for this crisis. Plus the drastic turbulence in the international financial market, global economic recession and other threats, the incompact and separate financial systems of the euro zone have impeded the formulation and implementation of many emergency policies. The euro zone has yielded little success in spite of its continuous efforts in strengthening coordination of economic and financial policies among euro zone member countries since the crisis. Now the euro zone leaders have finally realized that the incompact financial systems are restricting euro zone development, and a centralized financial system and much closer political and economic ties are fundamental solutions to the euro zone's debt crisis.

Any system reform must damage some part of vested interests, and it is a long and painful process for reforming the existing system and changing the mode of economic development.

Fortunately, the European decision-makers mustered courage and insight and are starting to essentially solve deep-seated problems and contradictions faced by Europe. From another perspective, the debt crisis is an opportunity to cure illness and start a new life.

Crisis has forced some members to promote domestic structural reforms to meet the development needs of the entire euro zone economy, but crisis also promotes the integration process. The euro zone makes the reform plan which can not only cure its system's own deficiencies but also win the trust and help from other countries and economic entities.

After the summit, the Europeans are sending a clear signal to the world that the euro zone is no longer able to paper over systemic problems. Although the market still lacks confidence in the European debt crisis, the euro and major European stock markets are still lingering in the doldrums, the market is still waiting to see the follow-up of European specific programs and measures, if the euro zone and the E.U. insist to following the institutional reforms, which must take a stable foundation for simply getting rid of the debt crisis to give euro zone countries a more responsible attitude toward the relationship between regional economic development and global economic and financial stability.

It is expected that the euro zone could introduce bolder, more powerful, more radical reform measures to strengthen the international community's confidence in the euro and the euro-zone countries.

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