Orphanides: EU leaders have failed to convince they can tackle the crisis

Central Bank Governor Athanasios Orphanides said yesterday that the main problem with Europe’s debt crisis was the governments’ failure to convince they can tackle it.

”The problem lies mainly in government. EU leaders failed to persuade that they can address the problem effectively,” Orphanides said.

He said the eurozone has to convince investors and this can be achieved if it immediately implements a strict fiscal contract.

Speaking at a Cyprus Economic Society event last night, Orphanides also said waning cooperation and solidarity has severely damaged mutual trust enjoyed by the eurozone in the past two years.

Above all, it is necessary to demonstrate mutual solidarity among member states, Orphanides said, adding that this is legally binding for the member states through articles 3 and 5 of the Treaty. 

The island’s top banker said that although European leaders have changed tack by announcing on December 9, 2011, a change in the overall decision to absorb losses from the private sector, in cases where a state is facing liquidity problems, “investors are not convinced.”

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