Euro Exit Should Not Be Taboo, Former ECB Chief Economist Says

(Bloomberg) -- In the run-up to the euro’s 20th anniversary, one of its chief architects says the idea of quitting the common currency can no longer be off limits if a member flouts fiscal rules.

Otmar Issing, a founding member of the executive board of the European Central Bank and its former chief economist, told German newspaper Der Tagesspiegel that the euro “can only survive if all countries comply with their commitments.”

“So far, there is no provision for a country’s exit from the monetary union -- the accession is considered irreversible, ‘eternal’ so to speak,” Issing said. “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.”

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Issing highlighted Italy as a particular problem, saying it “not only violates commitments that the country has made with the European Commission, it also gloats about its deliberate breach of the rules.”

Italy was involved in a standoff with Brussels in recent months over its proposed budget plans, although the European Commission decided against launching a disciplinary procedure after the country’s populist government pledged to rein in spending.

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